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MBA Basics of Marketing Notes

Introduction
Production and marketing of goods and services are the essence of economic life in any society. All organizations perform these two basic functions to satisfy their commitments to their stakeholders – the owners, the customers and the society, at large. They create a benefit that economists call utility which is the want-satisfying power of a good or service. There are four basic kinds of utility – form, time, place and ownership utility. Form utility is created when the firm converts raw materials and component inputs into finished goods and services. Although marketing provides important inputs that specify consumer preference, the organization’s production function is responsible for the actual creation of form utility. Marketing function creates time, place and ownership utilities.

Time and place utility occur when consumers find goods and services available when and where they want to purchase them. Online retailers with 24*7 format emphasize time utility. Vending machines focus on providing place utility for people buying snacks and soft drinks. The transfer of title to goods or services at the time of purchase creates ownership utility.

What is Marketing?
Continuous exposure to advertising and personal selling leads many people to link marketing and selling, or to think that marketing activities start once goods and services have been produced. While marketing certainly includes selling and advertising, it encompasses much more. Marketing also involves analyzing consumer needs, securing information needed to design and produce goods or services that match buyer expectations and creating and maintaining relationships with customers and suppliers. The following table summarizes the key differences between marketing and selling concepts.

Selling Vs. Marketing
Point of difference Selling Marketing
Starting point Factory Marketplace
Focus Existing products Customer needs
Means Selling and promoting Integrated marketing
End Profits through volume Profits through satisfaction

The difference between selling and marketing can be best illustrated by this popular customer quote: ‘Don’t tell me how good your product is, but tell me how good it will make me’.

The American Marketing Association, the official organization for academic and professional marketers, defines marketing as:

Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives.

Another definition goes as ‘ … process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others’. Simply put: Marketing is the delivery of customer satisfaction at a profit.

Exchanges in marketing are consummated not just between any two parties, but almost always among two or more parties, of which one or more taken on the role of buyer and one or more, the role of seller. A common set of conditions are present in the marketplace, viz.,
1) Buyers outnumber sellers
2) Any individual buyer is weaker than any individual seller economically, but
3) The total economic power of even a fraction of the buyers is enough to assure the existence of, or to put out of business, most sellers or groups of sellers, and
4) Consequently, the sellers compete to sway the largest number of buyers they can to their, rather than another seller’s (competitor’s) offerings. Finally and intriguingly,
5) The sellers in their attempt to meet competition and attract the largest number of buyers, are influenced as well, regularly modifying their behaviours so they will have more success, with more buyers, over time.

MBA Basics of Marketing Notes

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