Business Studies Part I
Business Studies Part II

Market and Marketing: Meaning

In the traditional sense, the term ‘market’ refers to the place where buyers and sellers gather to enter into transactions involving the exchange of goods and services. It is in this sense that this term is being used in day to day language, even today.

The other ways in which this term is being used is in the context of a product market (cotton market, gold or share market), geographic market (national and international market), type of buyers (consumer market and industrial market) and the quantity of goods transacted (retail market and wholesale market). But in a modern marketing sense, the term market has a broader meaning. It refers to a set of actual and potential buyers of a product or service. For example, when a fashion designer designs a new dress and offers it for exchange, all the people who are willing to buy and offer some value for it can be stated to be the market for that dress. Similarly, the market for fans or bicycles or electric bulbs or shampoos refers to all the actual and potential buyers for these products.

WHAT IS MARKETING?

The term marketing has been described by different people in different ways. Some people believe that marketing is the same thing as ‘shopping’. Whenever they go out shopping for certain products or services, they describe it as marketing. There are some other people who confuse marketing with ‘selling’ and feel that marketing activity starts after a product or service has been produced. Some people describe it to mean ‘merchandising’ or designing a product. All these descriptions may be partly correct but marketing is a much broader concept, which is discussed as follows: Traditionally marketing has been described in terms of its functions or activities. In this respect, marketing has been referred to like the performance of business activities that direct the flow of goods and services from producers to consumers. We know that most manufacturing firms do not produce goods for their own consumption but for the consumption or use by others. Therefore, to move the goods and services from producers to consumers, “Business is not financial science, it’s about trading, buying and selling. It’s about creating a product or service so good that people will pay for it.” — Anta Roddick “Marketing takes a day to learn. Unfortunately, it takes time to master.” — Philip Kotler’s number of activities such as product designing or merchandising, packaging, warehousing, transportation, branding, selling, advertising, and pricing is required. All these activities are referred to as marketing activities. Thus, ‘merchandising’, ‘selling’ and ‘shopping’ are all part of a large number of activities undertaken by a firm, which are collectively called marketing. It may be noted here that marketing is not merely a post-production activity. It includes many activities that are performed even before goods are actually produced and continue even after the goods have been sold. For example, activities such as identification of customer needs, collection of information for developing the product, designing suitable product package and giving it a brand name are performed before the commencement of the actual production. Similarly, many follow up activities are required for maintaining good customer relations for procuring repeat sale. In modern times, the 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. Taking the social perspective, Phillip Kolter has defined marketing as, “a social process by which individual groups obtain what they need and want through creating offerings and freely exchanging products and services of value with others”. Thus, marketing is a social process wherein people interact with others, in order to persuade them to act in a particular way, say to purchase a product or a service, rather than forcing them to do so.

A careful analysis of the definition shows the following important features of marketing:

  1. Need and Want: The process of marketing helps individuals and groups in obtaining what they need and want. Thus, the primary reason or motivation for people to engage in the process of marketing is to satisfy some of their needs or wants. In other words, the focus of the marketing process is on the satisfaction of the needs and wants of individuals and organizations. A need is a state of felt deprivation or feeling of being deprived of something. If unsatisfied, it leaves a person unhappy and uncomfortable. For example, on getting hungry, we become uncomfortable and start looking for objects that are 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. In other words, human needs shaped by such factors as culture, personality and religion are called wants. A basic need for food, for example, may take various forms such as the want for dosa and rice for a South Indian and chapatti and vegetables for a North Indian person. A marketer’s job in an organization is to identify the needs of the target customers and develop products and services that satisfy such needs.
  2. Creating a Market Offering: On the part of the marketers, the effort involves the creation of a ‘market offering. Market offering refers to a complete offer for a product or service, having given features like size, quality, taste, etc; at a certain price; available at a given outlet or location and so on. Let us say the offer is for a cell phone, available in four different versions, on the basis of certain features such as the size of memory, television viewing, internet, camera, etc., for a given price, say between Rs. 5,000 and Rs. 20,000 (depending on the model selected), available for sale at say firm’s exclusive shops in and around all metropolitan cities in the country. A good ‘market offer’ is the one that is developed after analyzing the needs and preferences of potential buyers.
  3. Customer Value: The process of marketing facilitates the exchange of products and services between the buyers and the sellers. The buyers, however, make buying decisions on their perceptions of the value of the product or service in satisfying their need, in relation to its cost. A product will be purchased only if it is perceived to be giving the greatest benefit or value for the money. The job of a marketer, therefore, is to add to the value of the product so that the customers prefer it in relation to the competing products and decide to purchase it.
  4. Exchange Mechanism: The process of marketing works through the exchange mechanism. The individuals (buyers and sellers) obtain what they need and want through the process of exchange. In other words, the process of marketing involves the exchange of products and services for money or something considered valuable by the people. Exchange refers to the process through which two or more parties come together to obtain the desired product or service from someone, offering the same by giving something in return. For example, a person feeling hungry may get food by offering to give money or some other product or service in return to someone who is willing to accept the same for food. In the modern world, goods are produced at different places and are distributed over a wide geographical area through various middlemen, involving exchanges at different levels of distribution. Exchange is, therefore, referred to as the essence of marketing. For any exchange to take place, it is important that the following conditions are satisfied:
  • Involvement of at least two parties viz., the buyer and the seller.
  • Each party should be capable of offering something of value to the other. For example, the seller offers a product and the buyer, money.
  • Each party should have the ability to communicate and deliver the product or service. No exchange can take place if the buyers and sellers are not able to communicate with each other or if they can not deliver something of value to the other.
  • Each party should have the freedom to accept or reject the other party’s offer. The parties should be willing to enter into a transaction with each other. Thus, the acceptance or rejection of the offer takes place on voluntary basis rather than on the bases of any compulsion. The points listed above are the necessary conditions for an exchange to take place. Whether the exchange actually takes place or not depends on the suitability of the act of exchange to both the parties, whether it makes the parties better off or at least no worse off. Another important point to be noted is that Marketing is not merely a business phenomenon or confined only to business organizations.

The market actually refers to a set up where potential buyers and sellers can meet to exchange goods or services. It is basically a medium that facilitates these transactions in an economy. It allows for the exchange of goods, services, information under the protection of the law and generally in exchange for consideration.

Traditionally a market is a physical location or place, like a bazaar or a shopping mall. The kind of market it is will depend on a lot of factors. Some of the ways in which we can characterize markets are,

  • According to the products being sold. Example: cotton market, iron market, share market
  • Based on geographical locations, like a local market or international market
  • By the types of buyers involved, example: consumer market, industrial market etc
  • The quantity of goods transacted between parties like a wholesale market or a retail market.

Marketing is a very wide term. It includes all the activities involved right from the production of the goods, until their consumption. Every activity in between, like designing, pricing, promotion, distribution, transportation, warehousing etc are activities of marketing.

Marketing is often taken to be a post-production activity, which is incorrect. Some activities of marketing start even before the production begins. One of its main aims is to satisfy customer needs, which requires understanding of these needs. And the product design will follow the leads of this study.

In modern terms, economists such as Philip Kotler have termed marketing as a “social process”. Here the wants and needs of the consumer are heard, and accordingly, products and services are offered to them. People interact with each other to exchange goods and services they require in exchange for money. There is no force or coercion, people will choose these products.

Important Features of Marketing:

  • Satisfy Needs and Wants: The main focus of all marketing activities is consumer satisfaction. When a group of individuals (potential customers) express their needs, the companies strive to satisfy these needs via marketing activities.
  • Creating a Market Offering: Then the companies must dedicate their efforts to create an ideal market offering based on their study of potential customers. This product/service offered must try to fulfill all of the requirements of the potential customer in a given market.
  • Customer Value: The customers buying decisions will be greatly dependent on the price of the product. It must satisfy their needs at the cost that they think is fair. So the sellers must add value to the product and price it accordingly, so the customer is willing and gets value for his price.
  • Exchange Mechanism: Marketing is not a one-way process. The seller must satisfy the needs of the buyer. And the buyer in an exchange must provide consideration for the goods/services, which can be money or something else. It must be an exchange mechanism.

Some major differences between market and marketing is as follows:

Market

Marketing

In this comparison Market is the narrower concept

Marketing is a much wider concept than market

Market is the point of interaction between buyers and sellers

Marketing is the social process by which human needs are identified and eventually satisfied

Market is a set-up, or a place, or a point of interaction

Marketing is a process involving roughly 12 activities

Market can be of many types based on the goods traded, quantity traded, geographical location etc

Marketing philosophy is generally uniform for any type of goods or services.