Revision: Unit-4 : Marketing >> Marketing - Concept and Functions Commerce ISC (Commerce) Class 12 CISCE

An oligopoly is a market structure in which a small number of large firms dominate the industry. These firms sell similar or differentiated products, and each firm’s decisions (such as pricing or output) directly affect the others, making them interdependent.

According to Augustin Cournot, “Economists understand the term 'market', not any particular marketplace in which things are bought and sold, but the whole of any region in which buyers and sellers are in such close contact with one another that the prices of the same goods tend to equality easily and quickly.”

The term ‘market’ refers to the whole region in which buyers and sellers are in close contact to effect the purchase and sale of a product.

In economics, the term market refers to the mechanism or arrangement by which buyers and sellers of a commodity are able to interact with each other for having economic exchange and are able to strike a deal about the price and the quantity to be bought and sold.

“A market is the set of all actual and potential buyers of a product.”, Phillip Kotler

“Market includes both place and region in which buyers and sellers are in free competition with one another.”, Pyle

“A market means a body of persons who are in intimate business relations and carry on extensive transactions in any commodity.”, Jevons

“A market is a centre in which forces leading to exchanges of title to a particular product operate and towards which and from which the actual goods tend to travel.”, Clark and Clark

 In simple words market is the place where two or more parties are involved in buying and selling. These two parties involved in the transactions are called buyers and sellers.

According to the American Marketing Association, “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.”

• Marketing consists of those activities which effect transfers in ownership of goods and care for their physical distribution. - F.E. Clark
• Marketing is the performance of business activities that direct the flow of goods and services from producer to consumer or user. - American Marketing Association
• Marketing is the economic process by means of which goods and services are exchanged and their values are determined in terms of money prices. - Dudley and Ravazan
• Marketing includes all activities involved in the creation of place, time and possession utility.  - Converse, Hugey and Mitchell 

• Marketing is a total system of interacting business activities designed to plan, price, promote and distribute want satisfying goods and services to present and potential customers.  - William J. Stanton
• Marketing is the process of planning and executing the conception, pricing, promotion and distribution of goods and services and ideas to create exchanges with target groups that satisfy customer and organisational objectives. - Philip Kotler
• Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders.  - American Marketing Associations 
• According to Philip Kotler, "the marketing concept is a customer orientation backed by integrated marketing aimed at generating customer's satisfaction as the key to satisfying organisational goals".

• "A market is the set of all actual and potential buyers of a product". - Philip Kotler
• "Market includes both place and region in which buyers and sellers are in free competition with one another".  - Pyle
• "A market means a body of persons who are in intimate business relations and carry on extensive transactions in any commodity". - Jevons
• "A market is a centre in which forces leading to exchanges of title to a particular product operate and towards which and from which the actual goods tend to travel".  - Clark and Clark
• "The term market refers not necessarily to a place but always to the buyers and
  sellers who are in direct contact with one another".  - Prof. Chapman

• In common language, a market is a place where buying and selling occur.
• In economics, a market is any arrangement that allows buyers and sellers to meet (physically or virtually), decide a price, and exchange a commodity or service.​
• A market can be local, national, or international.
• Essential elements of a market: commodity, buyers and sellers, area of operation, communication/contact, and price.​
• There are two main ways to define a market: geographical (place‑based) and functional (activity‑based).​
• Competition among buyers and sellers tends to produce one prevailing price for the same commodity at the same time within a market.​

• Meaning (narrow): Market is a place where buyers and sellers meet to buy and sell goods (e.g., bazar, mall).
• Meaning (modern/wider): Market is not necessary a place; it is the total environment where demand and supply operate and exchange happens.
• How exchange happens: Buyers and sellers can interact personally or through communication like telephone, e-mail, internet, etc.; prices tend to equalise quickly in free interaction.
• Importance in business: Market conditions decide what and how much to produce and force changes in product design, price, distribution and promotion due to competition.
• Main concepts of market:
  Place concept (Hatt/Bazar/Mall)
  Area concept (geographical region like European Common Market)
  Demand concept (total demand)
  Exchange concept (stock/commodity exchange)
  People concept (buyers, sellers, middlemen)

• Old meaning (exchange view): Marketing was seen as the process in which goods and services are exchanged and their value is decided in money prices.
• Narrow approach: This traditional view is narrow because it says marketing starts after production and ends with sale.
• Only “one-way traffic”: It focuses mainly on moving goods from producer to consumer, not on customer needs.
• Focus on distribution, not customers: It stresses the physical distribution of goods/services and is product-centred, not customer satisfaction-centred.
• Selling concept (Philip Kotler): Customers may not buy enough on their own, so firms must use aggressive selling and promotion to increase sales.

• Selling is the core of marketing: It is called the heart of marketing because business activity becomes meaningful only when goods/services are sold.
• Purpose of selling: Selling helps a firm satisfy customer needs and achieve business objectives by converting products into money/value.
• Meaning of selling: Selling means finding customers, creating demand, and transferring goods/services for money.
• Activities involved in selling: It includes informing and persuading buyers, using advertising, salesmanship and sales promotion, and also negotiating terms of sale and sales forecasting.
• Distribution channel concept + difficulty: A channel of distribution is the path from producer to ultimate consumer. Due to mass production and severe competition, selling needs careful planning, control, and continuous contact with customers/dealers and awareness of competitors’ strategies.

• Standardisation means fixing product standards (design, weight, colour, etc.) and ensuring goods match the set quality through inspection/sorting.
• It is more needed for agricultural products because their quality is not uniform; manufactured goods are usually already standardised.
• Grading means sorting products into different quality groups (grades) as per standards (e.g., apples: best/medium/inferior).
• Standardisation and grading make buying and selling easy (by sample/description), increase customer trust, and often help goods get better prices and wider markets.
• They also reduce marketing costs (transport/storage/advertising), help in finance & insurance (easy valuation, loan security), and support commodity exchange & foreign trade; quality marks include ISI and AGMARK (for food products).

• Packing means wrapping/crating/filling/compressing goods to protect them from spoilage, pilferage, breakage, leakage, etc., and to make handling easier.
• Different goods need different packing: cotton/jute → bales, oil/wine → bottles/barrels/cans, heavy goods → crates, fragile goods → boxes/tins/special containers.
• Packaging means designing and producing the package (size and type of pack for market). A package is the container/wrapper used for packing.
• A good package should be convenient, protective, economical, and attractive—it increases durability and catches customers’ attention.
• Packaging helps in information + branding + self-advertising + product identity, improves handling, protects during transport/storage, and sealed packaging reduces adulteration/duplication.

• Pricing is the process of fixing the price (money value) of a product or service.
• It is an important marketing function because it affects sales volume and profit.
• A product is accepted by customers when it is reasonably priced.
• A sound price policy helps in customer satisfaction and also earns profits for the firm.
• Price determination depends on many factors like cost of production, competition, nature of product, and the firm’s pricing objectives and policies.

• Meaning (traditional): Marketing includes all activities that direct the flow of goods and services from producers to consumers/ultimate users.
• Modern meaning (AMA): Marketing is the process of planning and executing ideas, goods and services to create exchanges that satisfy individual and organisational objectives.
• Customer-focused: Marketing mainly aims to understand customer needs and satisfy customers.
• Integrated + Creative process: Marketing is a coordinated process of many activities and it creates utility (time, place, possession) through storage, transportation and sale.
• Dynamic + wide scope: Marketing works within economic, social, legal, political forces, keeps adjusting to change, uses many subjects (economics, psychology, etc.), and is needed even in non-business to spread useful social ideas.

• Product is the base of marketing because all marketing activities revolve around the product.
• Marketing success depends on how well the product satisfies customer needs.
• Customers buy products that give maximum satisfaction/utility, so products must be planned accordingly.
• Product planning (merchandising) means deciding what products to produce or purchase for sale.
• It includes deciding design, colour, size, quality, plus introducing new products, improving existing ones, and removing unprofitable items from the product line.

• Marketing is the core of business: All business activities finally depend on marketing because production succeeds only when goods are consumed.
• Ensures survival and growth: Marketing is vital due to large-scale production, changing technology and changing customer tastes; it links production with consumption.
• Only source of revenue: Marketing generates sales and revenue, while other departments mainly create costs.
• Satisfies customer needs: Marketing identifies customer wants, transfers ownership and creates time, place and possession utility.
• Improves standard of living: It introduces new products, improves quality of life and helps make goods available at reasonable/low prices.
• Creates employment: Marketing generates jobs in transport, warehousing, advertising, selling and distribution, and supports other economic activities too.
• Helps national development & decisions: Marketing increases national income, improves utilisation of resources/capacity, and provides market information for decisions (what/how/when/how much to produce).

• Meaning of marketing functions: These are specialised activities needed to market goods and services (performed by marketing institutions and intermediaries) to satisfy consumer wants.
• Three main parts of marketing:
  Concentration (collecting goods at one centre), Dispersion (distributing to consumers in different places), and Equalisation (matching supply with demand).
• Main categories of marketing functions:
  Exchange functions (transfer of ownership), Physical functions (physical distribution), and Facilitating functions (assist exchange and distribution).
• Buying (first step): Buying means procurement of raw materials/components/finished goods and includes deciding needs, choosing suppliers, checking suitability, negotiating terms and arranging ownership transfer.
• Assembling (after buying): It means collecting purchased goods from different sources at one place—very important for agricultural goods. It reduces transport/handling and storage costs, enables bulk selling, improves financing, widens market, helps grading/standardisation, and regularises supply.

• Meaning: Transportation is the physical movement of goods from one place to another.
• Link between producer and consumer: It connects producers and consumers located at different places and supports assembling and dispersing of goods.
• Creates place utility & widens market: It creates place utility by taking goods where they are needed and helps a firm sell beyond the local market.
• Stabilises prices & supports economy: By removing distance barriers, it matches supply with demand, helps stabilise prices, and increases mobility of labour and capital.
• Modes & selection factors: Modes include road, rail, water, and air. Choice depends on cost, speed, safety, reliability, accessibility, availability, and carrying capacity.

• Meaning: Storage means holding and preserving goods from the time of production until the time of consumption.
• Important marketing function: Some amount of goods is stored at every stage in the marketing process, so it is essential for smooth distribution.
• Creates time utility: Storage bridges the time gap between production and consumption, so goods are available when needed.
• Balances demand and supply: It helps to equalise supply and demand, which stabilises prices in the market.
• Seasonal need: Warehousing is needed for goods like wheat, sugar, rice (seasonal production but year-round demand) and for products like umbrellas, woollens (produced all year but seasonal demand).

• Meaning: Marketing research is a scientific and systematic investigation to collect, record and analyse data to solve marketing problems and help decision-making.
• Methods used: Information is collected through trade journals, government publications, consumer associations, and by interviews, questionnaires, and surveys.
• Why it is important: Good marketing decisions need facts, so marketing research helps in consumer-oriented marketing and works like the intelligence wing of business.
• Helps in planning: It helps to estimate demand, identify actual and potential buyers, and understand customers’ needs, tastes and preferences.
• Improves product and strategy: It helps in testing new products, finding new uses/markets, judging customer attitudes and competition, and checking the effectiveness of distribution and advertising.

• Branding means giving a product a distinct brand name/symbol to differentiate it from competitors and give it a separate identity.
• Branding helps advertising and price control, and it builds reputation of the producer.
• Branding creates customer loyalty; branded goods get a wider market because buyers avoid personal inspection or samples.
• Registering a brand protects the businessman from imitations/duplicate products. A good brand should be brief, simple, easy to spell and remember, attractive, and distinctive.
• Labelling means putting labels/marks on the package to give details like weight, size, price, manufacturing & expiry date, and it may also show brand, grade, quality, and instructions for opening/handling.

• Informing and persuading customers is essential for successful marketing in a competitive world.
• Advertising makes the firm and its products known and creates desire to buy; it also retains old customers and attracts new ones.
• Advertising is done through many media like newspapers, magazines, radio, TV, cinema, posters and exhibitions, and it helps widen markets and increase sales.
• Advertising is useful for introducing new products, promoting new uses of existing products, building customer confidence, and reducing seasonal fluctuations in demand.
• Salesmanship creates demand through personal contact between buyer and seller; it provides customer feedback, increases sales, and salesmen act as friends and guides to customers.

• Financing in marketing means providing and managing money and credit to move goods from producer to consumer/industrial user.
• It helps to meet expenses like buying, storing stock, transporting and distributing goods to customers.
• Financing is an auxiliary (supporting) but essential marketing function—money and credit act like lubricants for smooth marketing activities.
• A large amount of capital is needed for maintaining inventory (stock) and other marketing operations.
• Long/medium-term finance comes from shares, debentures, financial institutions, while short-term finance comes from commercial banks and trade credit; hence banking and finance are the lifeline of business.

• Risk means uncertainty of profit or possibility of loss due to unknown and unavoidable future events.
• In marketing, risk-bearing refers to the financial risk of owning goods kept for sale in anticipation of demand.
• Risks may arise from changes in demand, fall in prices, spoilage during storage/transport, and losses due to theft, fire, flood, earthquake, bad debts, etc.
• Risks are unavoidable in business and cannot be completely eliminated; some are borne by the trader and some can be shifted to specialised agencies.
• Insurance helps reduce risk by covering issues like trade fluctuations, transit loss, employee dishonesty, exchange rate and credit risks; main types are fire, marine and life insurance.

• Meaning: E-marketing means using web, e-mail, wireless, or interactive digital TV to inform customers, interact with them, make transactions, and deliver products/services.
• Two parts: It involves (i) E-marketing efforts and (ii) E-marketing place.
• E-marketing efforts: Includes product display, product designing, online advertising, and selling on the web.
• Data & research needed: It requires a customer database and research on customer behaviour.
• E-marketing place: Refers to websites/online shops where electronic trading happens fast and with low transportation costs.