Tuesday, December 9, 2008


The answer to the question marketing is very simple...... Marketing is the creation of "value"...... Creation of value for someone so that they pay happily and come back for more later..... I am telling you this word "value"....... probably the most important one in management and mkting........ So marketing is much more than selling... Selling is only the final transaction..... Marketing involves:

1.   Identifying a market segment (you cant sell everything to everybody….. look at Rotomac and Mont Blanc). Segmentation can be done on the basis of Geography (would you sell Pringle in Kerala??), Demography (What do you think…. How much would a person earning Rs. 10,000 spend for buying a pen….. Don’t consider my case!!!), Psychography (Based on lifestyle, attitudes, values…. Look for an example!!) and Behaviour (How do you use a product, How does one drive?, How price sensitive is your target segment?)

2.   Targeting simply means to identify the one target segment that holds the most promise for you. You need to identify that the needs and wants of which segment matches well with the capabilities of your organization. Maruti too could have targeted the higher end market but they did not and chose to cater to the “economy” segment and rest is history. Targeting is more like your birthday cake being cut into slices and you choosing the one with the cherry. Pick up the segment that not only matches your strengths, holds enough potential but is also within comfortable reach to service.

3.   Positioning (creating an image of your product and your company in the consumer’s mind)……. Your product features, its price, where is it available…… all these will contribute to its “image”…. Don’t you agree??? Imagine Prada available in Phase 10 Mohali!!! Of course you cannot know positioning till you know of two guys called Al Ries and Jack Trout!!! Please do me a favor and look them up!!

You will see that the above given three will need you to decide upon the following decisions:

1.     What to make?

2.     Whom to sell it to?

3.     At what price?

4.     How much service will they expect?

5.     What do I brand my product as?

6.     Do I brand it at all?

7.     What do I say in my ads?

8.     Where do I give my ads?

9.     Do I give ads at all??

10.  How should I treat my customers?

11.  What should I ask them?

12.  Till when should I keep talking to them?.............................................

The list  is endless….. Asking these questions are in my opinion marketing…….

To understand the meaning of the term marketing it is important to analyse why we needed it in the first place. Till the late 1800s and early 1900s (The Industrial Revolution), consumption guided production. That means that people used to produce what they needed and since international trade had already started, some stuff would be procured through import. But in most cases the imported goods would be what we can call “lifestyle” or “luxury” goods like tobacco, silk, precious metals etc. Therefore in simple terms we can say that demand dictated what would be produced or procured….. OK??? Then came the industrial revolution and an increased movement of people across large distances, that too obviously due to increasing technological developments like the steamboat….. Now two things happened:

1.   Due to the industrial revolution, people could manufacture the same stuff but in extremely large quantities. Obviously you would need to “sell” all that you could make to convert the ability to produce into money…. Right??? The good thing was that at that time, the number of people who would need anything that could be manufactured was huge……. Take for example, a product called lens….. I am sure you will agree ever since people have lived on this planet many must have been experiencing reduced eyesight too…… So the need for spectacles was always there….. Till the ancient Assyrians (look up “Lens” on Wikipedia….amazing) invented the lens, no one had an idea that you could “magnify” something…… So the demand for a product called spectacles did always exist but no one, not even the consumers knew that they “needed’ something like that….. Therefore when spectacles began being produced, they would be gobbled up as soon as they would be made but the problem was that it must have been extremely time consuming and slow to grind lens manually and then set them into frames…… So production was the biggest limiting factor. So the demand would always have been far greater than the supply. So when industrial revolution gave the manufacturers the ability to use power (electric or mechanical), tools and machines to manufacture glasses in large numbers, they would have been faced with an ever hungry market and the more people they could reach, more they would have been able to sell….. right??? This example is also an example of “Latent Demand”…….. find out what that is…..

2.   The second thing is in my humble opinion, a more important occurrence……. Imagine you are living in India at the beginning of this century……. You are a commoner with just enough money to make ends meet (that used to be the case with max people in India)…… You have a bad eye sight and you see that the local Zamindaar who too had a bad eye sight has procured something from a far off land that can make him see properly!!! Wow!!! But the problem is that he had to shell out more money than you would earn in your life time……. A very sad, frustrating and common experience for many even today……. Don’t you think so???? Remember how it feels like when you see something you dearly wanted being purchased and used so casually by others….. Orra, D90, Semaster, Harvard, Columbia, V-Rod, SUV, Seychelles, Alaska…. This feeling would have been felt by many who could not afford to buy but yearned to do so…… Where does marketing fit in???? Arrey….. You have a market that is primed, fertile, bursting with desire….. do you have the innovativeness and timeliness to tap such huge virgin markets??? Explore the story of Nirma and how one gentleman; Karsanbhai Patel beat the hell out of a global giant…HLL!!

The point is…… By late 1800s and early 1900s, people had the capacity to design, manufacture and transport products in ways that did not exist earlier….. So we can say that during this time, we got the capability to “create new utilities” not only by creating new products (design utility, functional utility etc…..) but also the Price Place Utility!! How???? The more a manufacturer could manufacture, the economies of scale meant that his manufacturing cost went down dramatically, add to that the developments in transportation reduced the cost of inputs dramatically…… Therefore the selling price of most things fell sharply to become affordable to common people all across the globe!!! That is the price utility!! As for the place utility…… it is simple, you could make you product reach the end user further away that you could earlier!!!

So the world saw what would be later called the “Product Orientation” form of marketing…. Most of the guys (business men and academicians) were more concerned about manufacturing, production, costs, efficiencies etc…… In a way marketing till this time was a stepchild of Economics……

This went on like that for decades…… The manufacturer and seller were the kings….. The consumer had to buy what ever was manufactured at whatever cost at whichever place!!! Then came WW 1 and WW II…. I will not go into the details, but at the end of WW II the industrialized nations had an incredible amount of manufacturing capacity left idle……. In war these manufacturing capacities were needed to keep the forces supplied, now that the war was over, you faced an incredibly fast decrease in guns and ammo!! These units then migrated to manufacturing products for civil use and here too, the production was so large that “selling” became necessary…… So the “Selling Orientation” emerged in late 40s and Early 50s…… The focus shifted from manufacturing to the ability to “sell” that was being manufactured…… By the way can you think of any company that was set up specifically for the wars and later had to shift to consumer goods??? Some should come mind immediately:

·    BSA (Cycles…. The kind Maj. Rahul used to fly on in school!!) was Birmingham Small Arms company!!

·    Our “tashan” Bullet!!! Royal Enfield was the best gun manufacturer of the time!!! By the way the so called revolt of 1857 was according to the most accepted version of history began as a result of animal fat coated cartridges made by Lee Enfield!!

·    You must have seen your Dad banging away on his “Remington” at work!!! They I guess still make some of the best known high power rifles…..

·     Others: BMW, Rolls Royce, Harley Davidson!!!!

The 1970s saw the birth of what we call as the “Marketing Orientation”. By this time many bigwigs in the field of marketing began saying that it is the customer who “should’ be at the centre of marketing and it should be the consumers needs and wants that should dictate what will be made, marketed and how…… In way the commentators were saying that the “customer” should be the ultimate consideration while designing any marketing strategy….. Be it the product design, features of the product, its price, the packaging, where will you make it available, what will be said in its ad……. In simple words all the four Ps which Dr. Kotler gave should be focused on the consumer satisfaction of consumer needs…… that automatically meant that organizations now needed to “know” the consumer better…… Not only for understanding their needs and then designing products accordingly…… but to see how they reacted to the products……. That gave birth to marketing research as well…….

So what we call marketing today emerged in the late 1970s and this concept too has evolved over time. The growth in technology and media, the increasing understanding of the consumer psyche, new research etc…….. has brought in many developments to the concept of marketing. We have seen emergence of concepts like Service Marketing, Customer Relationship Management, e marketing, ERP etc…… All these changes and developments are reflected in the changing definition of marketing……..

The American Marketing Association (Did you visit their site??) in Oct 2007 gave the following changed definition of Marketing: 

Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.

So this is the current accepted definition of marketing and the academic answer to the question, What is Marketing…….

What I think of marketing is walking the tightrope to create situations that will make all the stakeholders (the consumer, the suppliers, wholesalers, retailers, the company owners, management, the government and of course you too!!) happy. Why do I call it the “walking the tight rope”?? Remember if you say that the aim of marketing is to make the consumer happy, that will be a problem as the shareholders are not investing money for “making people happy”…….. They need returns….. So in efforts to make consumers happy, you forget to fatten the bottom line…… you have had it!! Similarly to keep your bosses happy if you start indulging in questionable practices, then the government may get unhappy…… then there are the suppliers, the dealers and wholesalers, the retailers …….. a product will have to provide value to keep all of them happy!!!!

That dear students is Marketing!!!

Please try to analyse the definition, look up demand and try to find out if there is a difference between marketing and selling…….


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