What are the Functions of Marketing?
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The main objective of marketing is to see that raw materials move from suppliers to manufacturers from where final end products of consumers’ need/choice are moved to end consumers.
Marketing functions start with understanding buyers needs and ends with fulfilling these needs by seeing that commodities of customers choice move from production facility to the final target market. The functions of marketing include buying, selling, transporting, storing, standardizing and grading, financing, risk taking and market information. Apart from the above activities, marketing in the 21st century includes market research, planning, assisting in product development, and laying out different strategies for target markets. Functions of Marketing can be divided into following categories-
1. Marketing Research
2. Marketing planning
3. Product development
4. Buying and assembling
5. Standardisation and grading
6. Pricing
7. Branding, packaging and labelling
8. Distribution (Transportation and storage)
9. Promotion
10. Risk bearing
11. Financing
12. After sales service
1. Marketing Research
– it involves analysis of the market in identifying needs, wants and demands and aligning the sae with the organisations policies, weaknesses and strengths. Then the market segmentation is done basis the various environmental factors. The research data is extremely important in laying out strong marketing strategy. Getting answer to the following questions amounts to a sound Market research-
• What do the customers want?
• What is the quantity needed to meet the demand?
• What is the affordable or competitive price of the offering?
• When do they want it?
• What kind of promotion activities to apply?
• Where do the consumers want the offering?
Basis the data analysis best suitable opportunities are highlighted which help in the planning stage.
2. Marketing Planning
– the marketing plan is made by doing analysis of marketing data and the organisations objectives. It involves who will do what, when and how. The market planning function covers aspects of production levels, promotions and clear alignment of tasks for different departments in the organisation.
3. Product Planning and Development
– if the final offering is not of consumers’ needs, wants or demands, all the marketing efforts are of no use.
Needs are the basic human requirements, Needs become Wants when they are directed to specific offering. In a developing country like India, people rely heavily on motorbikes for commuting to work which constitutes a basic human need. These needs become wants if people need fuel efficient or high horse power bike to cover long distances. These wants become Demands when particular products are desired by a willingness to pay for the same. For example, not everyone can buy a high end bike like Royal Enfield, Harley Davidson, etc. Only a few are willing to pay for the same.
Ensuring a right kind of product is made by effective planning and development results in high sales. The characteristics/ features of the offering depend largely on the market needs and the existing offerings in the market by other manufacturers.
4. Buying and Assembling
– a manufacturer after finalising on the features of the offering for the target market has to buy the raw materials to produce that offering. The supply of the raw materials has to be adequate to meet the desired production. Similarly, a wholesaler or a retailer has to buy the offering in adequate quantity at the right time to ensure the product or service reaches the buyer. Buyer can be an end customer, retailer or a wholesaler. If a manufacturer is desirous of making a quality product at a particular price, the selection of the raw materials affects the same.
Important aspects of buying-
(a) Estimating the demand – estimation of sales and history of sale of same kind of product help in demand estimation.
For Example, before the launch of their brand of noodles, Patanjali products had estimated the sales of the noodles in Indian market by studying the competitors like Nestle Maggie, Topramen noodles, etc.
(b) Selection of goods in sync with consumer preferences – the raw materials bought have to be of the quality and price which can result in producing a product or service of buyers need, want or desire. The price and quality of raw materials is directly proportional to the price and quality of end products.
(c) Selection of supplier – highly reliable supplier is selected via negotiation to ensure constant supply of materials of the same quality at a competitive price. All aspects of quality, quantity, price, transportation, etc. are also finalised.
(d) Contract closing – entering into a formal contract is important to ensure smooth functioning of supply process. The ownership passes from the seller to the buyer.
Assembling – assembling constitutes part of buying. The purchases are stored at a convenient place as per the requirements of the buyer. It is required for all kinds of products to ensure easy accessibility and no damage.
(a) It aids the process of manufacturing,
(b) makes transportation and storage economical,
(c) storage can be done well in advance to avoid supply shortage hassle.
(d) Indirectly helps in price cuts of the offering.
5. Standardisation and Grading
– standardisation is establishing a model product with specific characteristics which provides a basis for comparison with other identical products. It specifies the minimum standards that an offering must possess. It determines the size, quality, design, weight, raw materials used, etc. which sets it apart from other products.
Grading is sorting of products with same characteristics or standards. The products from the same company can have same product with three levels of quality. For example – ‘A’ grade product, ‘B’ grade product and ‘C’ grade product. Grading enables a buyer to have a comparison of quality and price. For example, water pipes utilised from plumbing have different grades though they are from the same manufacturer. More the price better is the quality, guarantee and life of the product.
6. Pricing
– price is the value of the offering perceived by the customer. The pricing function is performed by designing comprehensive pricing system based on the Product performance and stage in the product life cycle. For example, a new launch of a smartphone in the market has a higher price. But after few months or a year the price usually changes depending on the competition, new launches, etc.
7. Branding, packaging and labelling
– an organisation is confronted with many decisions concerning its product line. A brand identifies the seller or maker. Branding is an activity of giving a name and identification to an offering. It gives the buyers a choice to opt for an offering among many other available in the market from different manufacturers. Branding includes giving an offering a name and a brand mark. When a brand name is registered and legalised it becomes a Trade Mark. It becomes a legal term and gives complete right to the manufacturer to use the brand name or brand logo.
Packaging is the external wrapper which aims at avoiding damage of the product during transportation, maintaining the quality over a long period, etc. Depending on the quantity the packaging has to be done as per the demand. Packaging is group of activities aimed at designing and creating the container or wrapper of the product.
Different kinds of materials are used for packaging depending on the product characteristics – wooden boxes, earthenware, gunny bags, cardboards, glass, Tin, Tetra packs, plastic, etc.
Label is a slip found on the container which gives all information about the product and its manufacturer. For example information about the contents, price, batch number, manufacturer, expiry date, nutrition information, etc. The manufacturers are sometimes required to put the specific details on the label as per the law of the land.
Labelling helps-
(a) In identification of the product
(b) Highlights the features of the product
(c) Encourages manufacture of quality products
(d) It promotes the product
(e) In identifying the product from a replica or a fake product
8. Distribution (Transportation and storage)
– distribution function involves physical movement of products from production facility to the place of requirement in a most effective and efficient manner. Transportation is performed either by the buyer or the seller as per the contract. The advent of technology not only improved but also created new transportation modes which has helped manufacturers target new markets. There are three modes of transport – Land (road and rail transport), Water transport, and Air transport. The organisation has to choose the best suitable mode depending on the quality, quantity, characteristics of the product and demand in the target market.
Storage or warehousing preserves the products at a particular point of consumption till the time it is utilised. It is necessary because of the following –
(a) Perishable commodities need storage to meet the demands throughout the year. For example. Fruits, vegetables, etc.
(b) Certain products are produced throughout the year but have seasonal demand. They need proper storage till they are made available during peak demand. For example, refrigerators, air conditioners, woollen clothes, etc.
(c) The products are stored in high quantities at a particular place and eventually distributed to retailers and wholesalers as required to shorten the delivery time.
9. Promotion
– it is the process of communicating with the target market directly or indirectly with the aim of increasing sales or making the buyers aware of the offering. The organisation has to employ effective promotion strategies to achieve its objectives. Types of promotion activities are- Advertising, publicity, personal selling, direct marketing, sales promotions, sponsorship
10. Risk bearing
– Marketing risk refers to uncertainties, damage, loss which an organisation can face while carrying out its marketing activities. There is a high possibility that the product can become obsolete because of changes in the financial status, changes in trends, availability of substitute offerings, etc. Marketing risks can be classified under-
(a) Physical risks – damage during transportation, expiry of product, etc.
(b) Political risks – change in policies – tax changes, etc.; change in government, etc.
(c) Natural risks – climate changes, natural disasters, etc.
(d) Human risks – dishonesty of employees, unrealistic demands of labour unions, etc.
(e) Competitors risk – Price cuts, added value services, etc. by competitors.
(f) Demand risk – change in preferences, trends, new products launch, etc. for example, launch of cell phones made the “pager” obsolete.
11. Financing
– it refers to raising of capital to ensure continuity of production and other activities like promotion, research, employee salaries, etc. A business requires finance till the death of the business. Just like business, marketing requires finance for all its activities.
12. After sales service
– after sales service is a concept of keeping a long term relationship with the customer. The customers today are spoiled by the choices available to them and it is easy for them to switch to a same kind of product from a different maker. It is said that cost of losing an existing customer is equal to gaining four new customers. Organisations in order to survive competition, provide services like free maintenance for a certain period, free visits by the engineers, easily available service parts, toll free numbers to call the service centres, etc. This earns the organisation customer loyalty, brand recognition, etc. When a new product line is launched by the makers, its success lies heavily on existing customer base.
Buying, Assembling and selling discussed above constitutes the Exchange function of marketing. Exchange means getting a desired product or service from someone by giving something its worth in return. It can be money or money’s worth. Through exchange a product is sold and it moves to the buyer.