Discuss the meaning and scope of marketing function. How does it influence/affect the exchange process. Illustrate with suitable examples.
"Marketing is the performance of business activities that directs the flow of goods and services from producer to consumer or user."
This definition is undoubtedly an improvement on describing marketing as selling as it shows that marketing does encompass other activities besides selling.
Schematically, this definition can be reproduced as shown below:
PRODUCER Product ----------------------- CONSUMER Need
. Marketing activities
This is very common idea among many people, for example, inadvertising agencies, as they normally are required to advertise to sella product, which already exists. Similarly, salesman are also given'products' and asked to sell them. Therefore, to them marketing often,starts with a product.
Meaning of Marketing Function
As an entrepreneur, when we went to start a new business, we don't have a product. In fact we will have to decide what product we should manufacture and sell.
We have first to decide what product we should select. This, we can do only if we can do only if we identify the needs which require satisfaction among human beings. Once, we have identified the needs of a group of human beings (or called market segment), we can determine the product which can help to satisfy that needs. This is a part of the marketing concept or we can say the part of modern philosophy of marketing.
Philip Kotler, an author in area of marketing defined marketing "a human activity directed at satisfying needs and wants through exchange processes."
The human need is a state in which a person feels deprived of
something. There are many human needs described in many
Briefly, these needs can be divided into two types.
1. Physiological needs
2. Psychological and Sociological needs.
The physiological needs consist of the need for food, clothing, shelter and even sex. Similarly, there are social needs for belonging, affection and love from others. Of course, there are.higher order psychological needs of self-actualisation.
Important to understand that there are different needs for human being on the earth. At any time some needs in a human being are dormant and unsatisfied, whereas others are active and are being satisfied. A marketing man may thus devise a product or service aimed at satisfying a certain dormant need and thus provide satisfaction to the user. This is why a man is often described as a bundle of dormant wants. The need exists buy these have to the converted into 'wants' by a marketing strategy.
In a socially competitive society, people may have unlimited wants but the ability to buy may be restricted on account of their economic background. They will, therefore, select from among those products, which give satisfaction or are needed more. Thus, when they are backed by ability to buy, the wants are converted into demand for your product. Therefore, when people decide to satisfy their needs and wants, in terms of marketing activities, exchange takes place.
On the current activities of human being, we can develop a process-oriented definition of marketing as "the process of ascertaining consumer needs, converting them into products or services, and then moving the product t or service to the final consumer or user to satisfy certain needs and wants of specific consumer segment or segments with emphasis on profitability, ensuing the optimum use of the resources available to the organisation".
In practice, often, separate departments with their own way of perform the business functions, such' as production, finance and marketing, are performed by separate departments with their own way of thinking, production is often considered the more important function as compare to marketing. This practice is, gradually losing ground and it is being recognized that unless you can sell a product, you should not manufacture it.
Production-orientation evolved because often products were designed and developed by inventors who hoped that they would sell. However, if these products fail to satisfy some needs they would never sell in the market place. Therefore, consumer oriented thinking becomes necessary for any business to survive and grow.
Normally, a salesman would like to think of his activity as a 'selling' process. Wh"en he does this, he is more cohcerned with handling over this product and receiving money in exchange. However, if he adopts the modern philosophy of treating it as a 'buying' process, his job becomes easier. This would definitely help him to start feeling and thinking of a customer. For instance, as he puts himself in the shoes of the customer and asks the question-why should I buy this article? His job will become smoother, as he will then know about the benefits and the disadvantages of the product or the service he is offering. This is an illustration of customer-oriented focus.
Scope and Appropriateness of Marketing Function
The first and foremost role is that it makes more potential aggregate demand and thus enlarges the size of the market. If we ask how does it help in the economic growth of a country. Then the answer is that through stimulation of demand, people are motivated to work harder and earn additional money to buy the various ideas, goods and services being marketed.
An additional advantage which accrues is that it accelerated the process of monetising the economy which in turn facilitates the
transfer of investible resources. (In India, about one-fourth of GNP and more than one-third of agricultural output are still non-monetised).
Another important role which marketing plays is that it helps in the discovery of entrepreneurial talent. Peter Drucker (a celebrated writer in the relevant field) makes this point very clearly when he observes that marketing is a multiplier of managers and entrepreneurs.
In the history of Indian industrial development during this century, we will find that several Indian industrialists began their business careers as distributors and wholesalers, and from the experience so gained ventured into the more risky fields of manufacturing and production activities.
Still another important contribution which marketing makes is that it helps in sustaining and improving the existing levels of employment.
The question occurs, how does it happen? Answer is that when a country advances economically it takes more and more people to distribute goods and proportionately a lesser number to make them. That is from the employment point of view production becomes relatively less significant than marketing and the related services of transportation, finance, communication, insurance, etc. which spring around it.