Class 12 Business Studies

Chapter 11

Marketing

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1.Explain the concept of marketing.

Satisfaction of customer’s needs is the key to the success of any organisation in the market.

All the decisions in a firm are taken from the point of view of the customers.

Customer’s satisfaction become the focal point of all decision making in the organisation

The marketing concept is based on the following:

(i) Identification of customer who is chosen as the target
(ii) Understanding needs and wants of customers in the target market.
(iii) Development of products for satisfying needs of the target market.
(iv) Satisfying needs of target market better than the competitors.
(v) Doing all this at a profit.

Thus the focus of the marketing concept is on customer needs and the customer satisfaction becomes the means to achieving the firms’ objective of maximising profit. The purpose of marketing is to generate customer value at a profit.

2.Explain the features of marketing.

The following are the four features of marketing

1. Needs and Wants:

The focus of the marketing process is on satisfaction of the needs and wants of individuals and organisations.
A need is a state of feeling, of being deprived of something. It leaves a person unhappy and uncomfortable.
Needs are basic to human beings and do not pertain to a particular product.
Wants, 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 marketer’s job is to identify needs of the target customers and develop products/services that satisfy such needs.

2. Creating 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.
A good ‘market offer’ is the one which is developed after analysing the needs and preferences of the potential buyers.

3. Customer Value:

A product will be purchased only if it is perceived to be giving greatest benefit or value for the money.
The job of a marketer, is to add to the value of the product so that the customers prefer it and decides to purchase it.

4. Exchange Mechanism:

The process of marketing works through the exchange mechanism.
The individuals obtain what they need and want through the process of exchange.
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.
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:

(i) Involvement of the buyer and the seller.
(ii) Each party should be capable of offering something of value to the other.
(iii) Each party should have the ability to communicate and deliver the product or service.
(iv) Each party should have freedom to accept or reject other party’s offer.
(v) The parties should be willing to enter into transaction with each other.

3.Discuss the functions of marketing.

1. Gathering and Analysing Market Information:

This is one of the important functions of a marketer.
It is necessary to identify the needs of the customers and take various decisions for the successful marketing of the products/services.
This helps to analyse, available opportunities and threats, as well as strengths and weaknesses of the organisation and help in deciding what opportunities can best be pursued by it.

2. Marketing Planning:

The job of a marketer is to develop proper marketing plans so that the marketing objectives of the organisation can be achieved.
For eg. a marketer of colour TV, having 10% market share in the country, aims at increasing his share to 20 %, in the next three years.
He will have to develop marketing plans for increasing the level of production, promotion of the products etc.
He has to specify the actions to achieve these objectives.

3 . Product designing and Development:

The design of the product contributes to making the product attractive to the target customers.
A good design can improve performance of a product and also give it a competitive advantage in the market.
For example, when we plan to buy a motorbike, we not only see its features like cost, mileage, but also the design aspects like shape, style, etc.

4. Standardisation and Grading:

Standardisation refers to producing goods of predetermined specifications, which helps in achieving uniformity and consistency in the output.
It ensures the buyers, that goods conform to the predetermined standards of quality, price and packaging
It reduces the need for inspection, testing and evaluation of the products.
Grading is the process of classification of products into different groups, on the basis of quality, size, etc.
Grading ensures that goods belong to a particular quality and helps in realising higher prices for high quality output.

5. Packaging and Labelling:

Packaging refers to designing and developing the package for the products. It is important not only for protection of the products but also helps promotion
Labelling refers to designing and developing the label to be put on the package.
The label may vary from a simple tag to complex graphics.

6. Branding:

Brand name helps to distinguish the product of a firm with that of the competitor.
This helps in building customer’s loyalty and promotes sale.
The important decision areas of branding include deciding the branding strategy, say, whether each product will be given a separate brand name, or the same brand name will be extended to all products of the company.
eg. say Phillips bulbs, tubes and TV or Videocon washing machine, TV, and refrigerator.
Selection of the brand name plays an important role in the success of a product.

7. Customer Support Services:

Customer support services such as, after sales services, handling customer complaints , credit services, maintenance and technical services etc are very important functions of marketing management
These services aims at providing maximum satisfaction to the customers, and are very effective in bringing repeat sales from the customers and developing brand loyality for a product

8. Pricing of Product:

Price of product refers to the amount of money customers have to pay to obtain a product.
It is an important factor affecting the success or failure of a product in the market. The demand for a product or service is related to its price.
Lower the price, higher would be the demand for the product and vice-versa.

9. Promotion:

Promotion is the method of informing the customers about the firm’s product, its features, etc., and persuading them to purchase these products.
It includes advertising, personal selling, publicity and sales promotion.
A marketer has to take crucial, decisions in respect of promotion such as deciding the promotion budget, the promotion mix,etc.

10. Physical Distribution:

Managing physical distribution is a very important function and the two major decision areas are
(a) channels of distribution or the marketing intermediaries (like wholesalers, retailers) to be used
(b) physical movement of the product from where it is produced to a place where it is required by the customers
The important decision areas also include managing inventory (levels of stock of goods), storage and warehousing and transportation

11. Transportation:

Transportation involves physical movement of goods from one place to the other.
Consumer products are wide spread and geographically separated from the place these are produced
So it is necessary to move them to the place where it is consumed.
For eg., tea produced in Assam has to be transported not only within the state, but to far off places like Tamil Nadu, Punjab etc where it is consumed.
A marketing firm has to analyse its transportation needs considering factors such as nature of the product, cost and location of target market and take decisions in respect of mode of transportation.

12. Storage or Warehousing:

Usually there is a time gap between the production of goods and their sale .
It can be due to irregular demand for the products or irregular supply due to seasonal production
So to maintain smooth flow of products in the market and to avoid delays, there is a need for proper storage of the products.
The function of storage is performed by different agencies such as manufacturers, wholesalers and retailers.

Explain the marketing philosophies

An understanding of the philosophy or the concept is important as it determines the emphasis to be put on different factors, in achieving the organisational objectives.

The concept or philosophy of marketing is as follows.

The Production Concept

During the earlier days of industrial revolution, the demand for industrial goods started picking up but the number of producers were limited.
As a result, the demand exceeded the supply. Selling was no problem. Anybody who could produce the goods was able to sell.
The focus of business activities was, therefore, on production of goods.
It was believed that profits could be maximised by producing at large scale, thereby reducing the average cost of production.
It was also assumed that consumers would favour those products which were widely available at an affordable price. Thus, availability and affordability of the product were considered to be the key to the success of a firm. Therefore, greater emphasis was placed on improving the production and distribution efficiency of the firms.

The Product Concept

As a result of emphasis on production capacity during the earlier days, the position of supply increased over period of time.
Mere availability and low price of the product could not ensure increased sale and as such the survival and growth of the firm. Thus, with the increase in the supply of the products, customers started looking for products which were superior in quality, performance and features.
Therefore, the emphasis of the firms shifted from quantity of production to quality of products.
The focus of business activity changed to bringing continuous improvement in the quality, incorporating new features, etc. Thus, product improvement became the key to profit maximisation of a firm, under the concept of product orientation.

The Selling Concept

An increase in the scale of business has improved the position of marketing environment with respect to supply of goods, resulting in increased competition among sellers, which lead to the selling concept.
The product quality and availability do not ensure growth of firms, because of the large number of sellers, selling quality products. This led to importance of attracting and persuading customers to buy the product.
The new business philosophy is, customers would not buy a product, unless they are adequately convinced and motivated to do so. Therefore, firms must undertake aggressive selling and promotional efforts to make customers buy their products.
The promotional techniques such as advertising, personal selling and sales promotion were considered essential for selling of products.
Making sale through any means became important.

7.Explain the Societal Marketing Concept

The business orientation should be meant not only to serve consumers needs but also consider issues of long-term social welfare.
The societal marketing concept holds that, the task of any organisation is to identify the needs and wants of the target market and deliver the desired satisfaction in an effective and efficient manner, so that the long term well-being of the consumers and the society is taken care of.
Thus, it is an extension of the marketing concept which is supplemented by the concern of long-term welfare of the society.
It pays attention to the social, ethical and ecological aspects of marketing which needs to be attended.

Understand the concept of marketing mix.

The marketing mix consists of various elements, which have broadly been classified into four categories, popularly known as four Ps of marketing. These are: (i) Product, (ii) Price, (iii) Place, and (iv) Promotion.

Describe the elements of marketing mix.

1. Product:

Product means goods or services or ‘anything of value’, which is offered to the market for sale.
For example, toiletries detergent powder , food products Steel, Trucks, Salt and a large number of other products; televisions, refrigerators, colour monitors for computers, etc; Amul offers a number of food products milk, ghee, butter, cheese, chocolates, etc.).
The concept of product relates to not only the physical product as mentioned in the above examples but also the benefits offered by it from customer’s view point (for example toothpaste is bought for whitening teeth, strengthening gums, etc.).
The important product decisions include deciding about the features, quality, packaging, labelling and branding of the products.

2. Price:

Price is the amount of money customers have to pay to obtain the product.
In case of most of the products, level of price affects the level of their demand.
The marketers have not only to decide about the objectives of price setting but to analyse the factors determining the price and fix a price for the firm’s products.
Decisions have also to be taken in respect of discounts to customers, traders and credit terms, etc., so that customers perceive the price to be in line with the value of the product.

3. Place:

Place or Physical Distribution include activities that make firm’s products available to the target customers.
Important decision areas in this respect include selection of dealers or intermediaries to reach the customers, providing support to the intermediaries (by way of discounts, promotional campaigns, etc.).
The intermediaries in turn keep inventory of the firm’s products, demonstrate them to potential buyers, negotiate price with buyers, close sales and also service the products after the sale.
The other decision areas relate to managing inventory, storage and warehousing and transportation of goods from the place it is produced to the place it is required by the buyers.

4. Promotion:

Promotion of products and services include activities that communicate availability, features, merits, etc., of the products to the target customers and persuade them to buy it.
Most marketing organisations, undertake various promotional activities and spend substantial amount of money on the promotion of their goods through using number of tools such as advertising, personal selling and sales promotion techniques (like price discounts, free samples, etc.).
A large number of decisions are to be taken in each of the area specified above.
For example, in the respect of advertising it is important to decide about the message, the media to be used (example, print-media– newspaper, magazines, the objections of customers, etc.).
The success of a market offer will depend on how well these ingredients are mixed to create superior value for the customers and simultaneously achieve their sale and profit objectives.

Explain the concept of product as an element of marketing mix.

A buyer buys a product or service for what it does for her or the benefit it provides to her. There can be three types of benefits a customer may seek to satisfy from the purchase of a product, viz., (i) functional benefits, (ii) psychological benefits, and (iii) social benefits. For example, the purchase of a motorcycle provides functional utility of transportation, but at the same time satisfies the need for prestige and esteem and provides social benefit by the way of acceptance from a group, by riding a motorbike. Thus, all these aspects should be considered while planning for a product.

Explain the concept of branding, labelling and packaging.

Branding.

Marketers has to decide whether the firm’s products will be marketed under a brand name or a generic name.
Generic name refers to the name of the whole class of the product. example, a book, a watch, soap, etc. So it is very difficult for the marketers to distinguish their products from that of their competitors.
Thus, most marketers give a name to their product, which helps in identifying and distinguishing their products from the competitors’ products.
This process of giving a name or a sign or a symbol etc., to a product is called branding.

The various terms relating to branding are as follows:

1. Brand: A brand is a name, term, sign, symbol, design used to identify the products— of one seller from those of the competitors. eg., Bata, Lifebuoy etc.
2. Brand Name: That part of a brand, which can be spoken, is called a brand name.
3. Brand Mark: That part of a brand which can be recognised but which is not utterable is called brand mark. It appears in the form of a symbol, design, distinct colour scheme or lettering.
4. Trade Mark: A brand or part of a brand that is given legal protection is called trademark. In that case, no other firm can use such name or mark in the country.

Labelling

Labelling relates to designing the label to be put on the package.
The label may vary from a simple tag attached to the product (such as in case of local unbranded products like sugar, wheat, pulses, etc.) indicating some information about the quality or price,
Label's are useful in providing detailed information about the product, its contents, method of use, etc.

Packaging.

There can be three different levels of packaging.

1. Primary Package: It refers to the product’s immediate container. In some cases, the primary package is kept till the consumer is ready to use the product (e.g., plastic packet for socks); whereas in other cases, it is kept throughout the life of the product (e.g., a toothpaste tube, a match box, etc.).
2. Secondary Packaging: It refers to additional layers of protection that are kept till the product is ready for use, e.g., a tube of shaving cream usually comes in a card board box. When consumers start using the shaving cream, they will dispose off the box but retain the primary tube.
3. Transportation Packaging: It refers to further packaging components necessary for storage, and transportation. eg., a toothpaste manufacturer may send the goods to retailers in corrugated boxes containing 10, 20, or 100 units.

Explain the concept of price as an element of marketing mix.

Price is the amount of money customers have to pay to obtain the product.
For most of the products, level of price affects the level of their demand.
The marketers have to decide about the objectives of price setting
They must analyse the factors determining the price and fix a price for the firm’s products.
Decisions must be taken as to what discounts must be given to customers, traders and credit terms, etc.,

Describe the factors determining price of a product.

1. Product cost:

This includes the cost of producing, distributing and selling the product.
The cost sets the minimum level or the floor price at which the product may be sold.
There are broadly three types of costs: viz., Fixed Costs, Variable Costs and Semi Variable Costs.
Fixed costs are those costs, which do not vary with the level of activity of a firm say with the volume of production or sale.
The costs which vary in direct proportion with the level of activity are called variable costs.
For example, the costs of raw material, labour and power are directly related with the quantity of goods produced.
Semi variable costs are those costs which vary with the level of activity but not in direct proportion with it.
Total Costs are the sum total of the fixed, variable and semi-variable costs for the specific level of activity, say volume of sales or quantity produced.

2. The Utility and Demand:

the product costs set the lower limits of the price, and the utility provided by the product and the intensity of demand of the buyer sets the upper limit of price,
The buyer may be ready to pay up to the point where the utility from the product is at least equal to the sacrifice made in terms of the price paid.
According to the law of demand, consumers usually purchase more units at a low price than at a high price.

3. Extent of Competition in the Market:

The price will tend to reach the upper limit in case there is lesser degree of competition while under conditions of free competition, the price will tend to be set at the lowest level
Competitors’ prices and their anticipated reactions must be considered before fixing the price of a product.
Not only the price but the quality and the features of the competitive products must be examined carefully, before fixing the price.

4. Government and legal Regulations:

Government can declare a product as essential product and regulate its price.
Government can declare a product as essential product and regulate its price.Example, drugs.

5. Pricing Objectives:

The objective is stated to be maximise the profits.
If the firm decides to maximise profits in the short run, it would tend to charge maximum price for its products.
But if it is to maximise its total profit in the long run, it would opt for a lower per unit price
the pricing objectives of a firm may also include: (a) Obtaining Market Share Leadership: If a firms objective is to obtain larger share of the market; it will keep the price of its products at lower levels
(b) Surviving in a Competitive Market: If a firm is facing difficulties in surviving in the market it may resort to discounting its products or running a promotion campaign to liquidate its stock
(c) Attaining Product Quality Leadership: In this case, normally higher prices are charged to cover high quality and high cost of research and Development.

6. Marketing Methods Used:

Price fixation process is also affected by other elements of marketing such as distribution system, quality of salesmen employed, quality and amount of advertising, sales promotion efforts, the type of packaging, product differentiation, credit facility and customer services provided.
For example, if a company provides free home delivery, it has some of flexibility in fixing prices.

Explain the concept of physical distribution

It is the fourth important element of marketing mix
Through this component the goods and services are made available at right place, at right time to right people without change.
Once goods are manufactured, packaged, branded, priced, and promoted, these must be made available to customers at the right place, in right quantity and at the right time.
Thus, it is an important responsibility of the marketers to make the product physically available at a place where the customers would like them to buy.
The physical handling and movement of goods from place of production to the place of distribution is referred to as physical distribution
Important activities involved in the physical distribution include transportation, warehousing, material handling, and inventory control.

Explain the components of physical distribution.

The main components of physical distribution are explained as follows:

1. Order Processing:

In a buyer-seller relationship, order placement is the first step.
A good physical distribution system should provide for an accurate and speedy processing of orders,
in the absence of which, goods would reach the customers late or in wrong quantity or specifications. This would result in customer dissatisfaction.

2. Transportation:

Transportation is the means of carrying goods and raw materials from the point of production to the point of sale.
It is one of the major elements in the physical distribution of goods. It is important because unless the goods are physically made available, the sale cannot be completed.

3. Warehousing:

Warehousing refers to the act of storing and assorting products in order to create time utility in them.
The basic purpose of warehousing is to arrange placement of goods and provide facilities to store them.
The need for warehousing arises because there may be difference between the time a product is produced and the time it is required for consumption.
For products requiring long term storage (such as agricultural products) the warehouses are located near production sites to reduce charges on transportation.
the products which are bulky and hard to ship (machinery, automobiles) as well as perishable products (bakery, meat, vegetables) are kept at different locations near the market.

4. Inventory Control:

the inventory decisions hold key to success for many manufacturers, especially those where the per unit cost is high.
A very important decision iis deciding about the level of inventory.
Higher the level of inventory, higher will be the level of service to customers but the cost of carrying the inventory will also be high because lot of capital would be tied up in the stock.
Thus, a balance is to be maintained in respect of the cost and customer satisfaction.

Describe the various channels of distribution.

Channels of distribution means the path through which the possession of goods is done from the producer to the consumer.There are two types of channels of distribution

(i)Direct Channel

In this case the goods are made directly available to the consumer from the manufacturer.Here no intermediaries are involved. eg. selling directly to the consumer through own workforce.

(ii)Indirect channel

In this case selling is done indirectly through intermediaries.That is the product will first go the wholesaler and then to the retailer and finally to the consumer.

Explain the concept of promotion as an element of marketing mix.

Promotion mix refers to combination of promotional tools used by an organisation to achieve its communication objectives. Various tools of communication are used by the marketers to inform and persuade customers about their firm’s products. These include: (i) Advertising, (ii) Personal Selling, (iii) Sales Promotion, and (iv) Publicity. These tools are also called elements of promotion mix and can be used in different combinations, to achieve the goals of promotion. For example, consumer goods firms may use more of advertising through mass media while the industrial goods firms may be using more of personal selling. What combination of these elements is used by a firm will depend upon various factors such as nature of market, nature product, the promotions budget, objectives of promotion, etc. Let us first know about these elements in some details.

Describe the elements of promotion mix.

1.Advertising

Advertising is the most commonly used tool of promotion.
It is an impersonal form of communication, which is paid for by the marketers (sponsors) to promote some goods or service.
The most common modes of advertising are ‘newspapers’, ‘magazines’, ‘television’, and ‘radio’.
The important features of advertising are as follows:
(i) Paid Form: Advertising is a paid form of communication. That is, the sponsor has to bear the cost of communicating with the prospects.
(ii) Impersonality: There is no direct face-to-face contact between the prospect and the advertiser.
(iii) Identified Sponsor: Advertising is undertaken by some identified individual or company, who makes the advertising efforts and also bears the cost of it.

2.Personal Selling

Personal selling involves oral presentation of message in the form of conversation with one or more prospective customers for the purpose of making sales.
It is a personal form of communication.
Companies appoint salespersons to contact prospective buyers and create awareness about the product and develop product preferences with the aim of making sale.

3.Sales promotion

refers to short- term incentives, which are designed to encourage the buyers to make immediate purchase of a product or service.
These include all promotional efforts other than advertising, personal selling and publicity, used by a company to boost its sales.
Sales promotion activities include offering cash discounts, sales contests, free gift offers, and free sample distribution.
Sales promotion is usually undertaken to supplement other promotional efforts such as advertising and personal selling

4.Publicity

is also a non-personal form of communication like advertising except that it is non paid
Publicity generally takes place when favourable news is presented in the mass media about a product or service.
For example, if a manufacturer achieves a breakthrough by developing a car engine, which runs on water instead of petrol, and this news is covered by television or radio or newspapers in the form of a news item.
It would be termed as publicity because the engine manufacturer would benefit by the media but would not bear any cost for the same.

Explain the concept of advertising.

Advertising is the most commonly used tool of promotion.
It is an impersonal form of communication, which is paid for by the marketers (sponsors) to promote some goods or service.
The most common modes of advertising are ‘newspapers’, ‘magazines’, ‘television’, and ‘radio’.
The important features of advertising are as follows:
(i) Paid Form: Advertising is a paid form of communication. That is, the sponsor has to bear the cost of communicating with the prospects.
(ii) Impersonality: There is no direct face-to-face contact between the prospect and the advertiser.
(iii) Identified Sponsor: Advertising is undertaken by some identified individual or company, who makes the advertising efforts and also bears the cost of it.

Advertising, has the following merits: (i) Mass Reach: (ii) Enhancing Customer Satisfaction and Confidence: (iii) Expressiveness: (iv) Economy:

Because of its wide reach, the per-unit cost of reach comes low.

Explain the concept of sales promotion.

refers to short- term incentives, which are designed to encourage the buyers to make immediate purchase of a product or service.
These include all promotional efforts other than advertising, personal selling and publicity, used by a company to boost its sales.
Sales promotion activities include offering cash discounts, sales contests, free gift offers, and free sample distribution.
Sales promotion is usually undertaken to supplement other promotional efforts such as advertising and personal selling

It also has the following merits like (i) Attention Value: Sales promotion activities attract attention of the people because of the use of incentives. (ii) Useful in New Product Launch: Sales promotion tools can be very effective at the time of introduction of a new product in the market. It induces people to break away from their regular buying behaviour and try the new product. (iii) Synergy in Total Promotional Efforts:

Discuss the concept of public relations.

Managing public opinion of an organisation is an important task performed by the marketing department.
public relations involve a variety of programmes designed to promote or protect a company’s image and its individual products in the eyes of the public.
Most organisations have a separate department to manage public relations. Their main task is to disseminate information and build goodwill about the business.

The public relations department performs five functions:

1. Press relations: Information about the organisation needs to be presented in a positive manner in the press.

2. Product publicity: New products require special effort to publicise them and the company has to sponsor such programmes. The public relations department manages the sponsoring of such events.

3. Corporate communication: The image of the organisation needs to be promoted through communicating with the public and the employees within the organisation. This is usually done with the help of newsletter, annual reports, brochures, articles and audio-visual materials

4. Lobbying: The organisation has to deal with government officials and different ministers in charge of corporate affairs, industry, finance with respect to policies relating to business and the economy.

5. Counselling: The public relations department advises the management on general issues which affect the public and the position the company would like to the take on a particular issue.

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Study Notes

NCERT business studies class 12 | Marketing chapter 11|cbse/puc class 12 business studies notes

Class 12 Business Studies

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