Marketing management

I I S E M E S T E R M B A , P O N D I C H E R RY U N I V E R S I T Y

MARKETING MANAGEMENT

Mohammed Umair| M.Com, PGDBA, NETDepartment of CommerceKristu Jayanti College

Department of ManagementSt. Joseph’s Evening College

&

UNIT 1: CONTENTS

• Introduction to Marketing and Marketing Management, Marketing • Concepts - Marketing Process Marketing mix -

Marketing environment. • Consumer Markets and buying behavior - Market

segmentation and targeting and positioning.

For a comprehensive understanding of the subject

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WHAT IS MARKETING?

• Marketing is a planned process through which organizations primarily identify the needs of people and then recognize target customer among the people, satisfy the needs of the customer by selling products & services and most importantly retain the customer.

DEFINITION

Philip Kotler says, “Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering and freely exchanging products and services of value with others”.

MARKETING & SELLING

Dimension Marketing Selling

MeaningIt is satisfying needs and wants through an exchange process.

Selling only involves exchange of money for goods or service or an effort to execute the exchange process.

InceptionMarketing starts before decision of production of goods or services.

Selling starts after decision of production of goods or services

Subject Matter

Marketing accords importance to satisfaction of consumers wants effectively.

Selling emphasizes on sale products & stresses needs of seller.

EnvironmentMarketing has to take into consideration both the internal and external factors of the business.

Selling is concerned with the internal factors like production and distribution of goods.

Scope

Marketing is a wider term, which, includes selling, advertising, customer service and also the distribution of goods.

Selling is the part of marketing and thus it is not a comprehensive term.

Dynamics

It is an integrated approach that utilizes various functional areas of business in order to achieve the long-term objectives of business. Emphasis on adopting future technology.

It is short-run-oriented & focuses on today’s products and markets. It emphasis on staying with existing technology and reducing costs.

MARKETING PROCESS

1. Business enterprise: The starting point of marketing process is formulation of a business enterprise and the prime objective of business is to make profit and avoid loss.

2. Environmental Scanning: Environmental scanning here refers to understanding of Market, which can be done with effective marketing research.

3. Identifying Needs, Wants & Demands: Needs, wants and demands establishes the base for marketing principles. Even though they are very simple terminologies yet they possess a complex meaning behind them. Therefore it is very prudent for the business enterprises to understand the target market's needs, wants, and demands.

MARKETING PROCESS

4. Products & Services: In today’s competitive market environment, consumers develop new needs and wants which need to be met and satisfied. In order to meet these, business firms have to launch unique products or services in their effort to remain viable and competitive.

5. Value, Cost & Satisfaction: The most important criteria for a customer to buy or select a product includes value which the customer derives by using & buying the product, value is ascertained by combining quality, service & cost.

MARKETING PROCESS

6. Exchange process: Exchange is process of transfer of goods or services from one entity to another by offering something in return.

7. Customer Relationship Management: The modern concept of marketing not only focuses on sales but also lays strong emphasis on understanding the post purchase behavior of the customer.

8. Customer Orientation & Behavior: Customer orientation refers to customer-centric business. It is the behaviour of the consumer which impacts their decision to purchase or not to purchase the product.

GOALS OF MARKETING

• Cater the wants and needs of customer • To improve and maintain image of the product or the

business• To increase market share• To target an unexplored market• To target a new market segment in an explored market• To build trust and rapport with customers• Attract new customers & retain existing customers• To illustrate benefits & introduce products• To boost sales revenue• To develop new business ideas• To understand consumer behaviour through marketing

research

SCOPE OF MARKETING

• Goods: Physical goods constitute the bulk of most countries’ production and marketing exercise. The production of Goods are primarily determined by the earning capacity of the people to buy & demand factor influenced by host of forces. • Services: A type of economic activity that is

intangible. As economies advance, a growing proportion of their activities are focused on the production of services. • Experiences: By incorporating several products

and services a business enterprise can develop a customer experience. Space tourism is space travel for recreational, leisure or business purposes.

What can be marketed?

SCOPE OF MARKETING

• Persons: Brand ambassadors have become a vital component of marketing in the present business environment. • Events: Sponsoring & promoting an event is an

effective way to simultaneously support producers in a business area and advertise products, services & brands of business.• Places: This includes towns, cities, states and

whole country engaged in attracting tourists, investors, companies and NRIs. • Properties: It refers to intellectual rights such as

copyrights, patents and trade-marks etc,


SCOPE OF MARKETING

• Organizations: It refers to two or more people working together to achieve something (that often cannot be accomplished alone). • Information: In the context of present business

scenario information is the most valuable asset which can be marketed. • Ideas: Products & services offered by marketers

possess a basic idea which becomes the basic essence.


EVOLUTION OF MARKETING APPROACH

ROLE & SIGNIFICANCE OF MARKETING

• Marketing scripts organization’s reputation• Marketing generates revenue• Marketing makes organization dynamic • Facilitates demand & product awareness• Offers wide employment opportunities• Offers satisfaction of customer

requirements• Ensures healthy competition• Business value acceleration• Creates Competitive Advantage

FUNCTION OF MARKETING

• Buying: Buying primarily involves decisions on what to buy, what quality, how much, from whom, when and at what price.

• Selling: The core objective of marketing is to facilitate sales. Selling is concerned with the persuasion of prospective buyers to actually complete the purchase of a product or service.

• Pricing: Pricing of products or services play a vital role in marketing and as it directly impacts the profitability of business.

• Assembling: It is important to note that assembling and buying are separate functions, assembling starts after the goods have already been purchased.

A: Exchange Functions


• Transportation: The success of distribution in marketing system depends upon an economical and effective transportation system.

• Storage: Storage refers to the holding and preservation of goods until they are despatched to the consumers.

• Retailing: The word retailing has its origins in the French verb “retailer‟, which means “to cut up”, and refers to one of the fundamental retailing activities which is to buy in larger quantities and sell in smaller quantities.

• Stock Management• Inventory or stock management is a significant function of

marketing and reflects the health of the supply chain as well as the impacts the financial health.

• Standardisation & Grading: Standardization helps the marketers keep the costs low & target many potential customers. It also brings in uniformity in establishment of certain standards

B: Supply Chain Functions


• Financing: The services of providing the credit and money needed to meet the cost of getting merchandise into the hands of the final user is commonly referred to as finance function in marketing. • Customer Service: In order to manage customers,

marketers must be concerned with the entire experience a customer derives from using the products or services offered by the marketer. • Marketing information: Marketing information is use

the management information system designed to support decision making in marketing.

C: Utility Functions

MARKETING ENVIRONMENT

• What is Market Environment?• The market environment refers to various internal &

external factors and forces that affect a firm’s activities such as marketing plans, customer management, financial planning etc., directly or indirectly. Successful companies recognize and respond effectively to trends in marketing environment.

“The Aggregate of all conditions events and influences that surround and affect business”. - Davis Keith

ENVIRONMENTAL SCANNING

• Environment scanning is a process of monitoring, forecasting, assessing & collecting information about various internal & external factors & forces influencing a marketing firm.

Why analyse needs & trends of environment?

1. Identification of SWOT2. Explore & exploit business opportunities3. Respond to new demands & trends4. To grow & stay alive in competition5. Ensure effective utilization of resources6. To build brand reputation7. Proactive approach & strategy building

COMPONENTS OF MARKETING ENVIRONMENT

A: MICRO ENVIRONMENT

• HR and Marketing are closely bonded, HR department provides appropriate personnel for various marketing jobs and plan training programs to improve the employee skills, as well as motivate them.

• For this marketing department makes its marketing budget and it is cleared by finance department. Marketing and finance interface has a direct impact on issues such as product investment decisions, brand valuation, working capital requirements.

• Often, research and development works closely with the marketing department. The core activity of R&D department involves development of new products, which are essential for marketers to generate profits in medium and long term.

• Marketing is a tool to drive sales and satisfy the needs of the customers. Therefore the efficacy of the marketing is dependent on production and operations management to ensure that a business sells products that meet customer needs and wants.

1. Functional areas of business

A: MICRO ENVIRONMENT

• Suppliers: suppliers are part of the supply chain management who supplies the resources needed by the firm to produce its goods and services, this includes manufacturers, importers, wholesalers, retailers and hire companies.

• Marketing intermediaries: There are different intermediaries involved in marketing distribution channel from original producer to the final user.

• Customer: Customers are the most important stake holder of any business. They are the resource upon which the success of the business depends.

• Shareholders: Shareholders are the owners of Business. Depending on structure of the company the shareholding pattern varies.

• Competitors: In business it is very important to understand who the competitors are? Analysing competitors closely will help in framing marketing plans effectively, Competitor analysis is an important part of designing marketing strategies.

B: MACRO ENVIRONMENT

• Political & Legal Environment• Political System• Political Risk• Political Ideologies• Indicators of Political Instability• Monopoly controls• Legislations

Micro-environment refers to all major external factors and forces over which the marketing firm has no control.

The political environment simply refers to the way a country is being run in terms of politics. The political environment includes all laws, government agencies and lobbying groups that influence or restrict individuals or organisations.


• Economic Environment• Economic System• Inflation rates• Business cycles• Economic growth rate• Economic Policies• Savings, debt, and credit availability


Economic environment refers to the sum of all economic factors, policies and nature of an economy, trade cycles, economic resources, level of income, distribution of income and wealth etc. which acts as a major determinant of the economic environment within which the business enterprise work.


• Demographic Environment• Population Growth• Population Age Mix• Educational Groups• Household Patterns• Geographical Shifts in Population


Demography is the study of population and demographic environment refers to trends in County's population composition and its growth, levels of income, household patterns & regional characteristics and other demographic factors of the market in which an organization operates.


• Technological Environment• Degree of Automation• Emerging Technologies• R&D Activity• Technology Transfer• Use of IT & communication


Technological Environment means the advancements in the field of technology which influences business by new inventions of productions and other innovations in techniques to perform the business operations and product development.


• Socio-Cultural Environment• Changes in lifestyles• Family structures• Attitudes and values• Household Patterns• Social Mobility


Socio-cultural Environment refers to a set of beliefs, customs, practices, norms and behaviour that exists within a society which describes relationship to themselves and others. Socio-cultural factors intensely influence the way people live and help determine what, where, how, and when customers buy a firm’s products.


• Natural Environment• Geographical Location• Availability of resource• Access to natural resources• Concern for environment• Increased energy cost


Natural environment refers to combination of natural resources which is used by business as inputs and affects their marketing activities. This includes use of raw material from nature for producing goods, all agricultural inputs are also used in manufacturing not only this machineries used in business are also made from metals of nature.

MARKET SEGMENTATION AND TARGETING AND POSITIONING

1. Market segmentation is a process of dividing a market into different sections of customers with common needs or features and targeting them with distinct marketing mix.

2. After segmentation of market, marketing firm designs various marketing strategies such price, promotion, place etc. according to the tastes of the individuals of particular segment this process is called Target marketing.

3. Positioning is the final step, Positioning is an act of creating a distinctive identity in the minds of target customers for marketer’s product, brand, or organization.

MARKET SEGMENTATION AND TARGETING AND POSITIONING

• A market is a diverse place made up of many different customers with different backgrounds, culture, religion, countries of origin, interests, needs and wants.

• Therefore it is more viable dividing up customer into groups according to particular criteria by using strategy of Segmentation, Targeting and Positioning. STP strategy is more suitable when the markets are large and diverse and by using an appropriate market STP strategy marketers can provide wide range of products and services to meet diverse needs of customers which is attractive, viable and also profitable.

STEPS IN THE TARGET MARKETING PROCESS

• Step :1 Segmentation • Determine which kinds of customers exist and

describe market segments.• Step :2 Targeting• Evaluate segments and decide which the best to

serve.• Step :3 Positioning• Communicating the target customer with

marketing• Mix with a distinguished identity, to create a

competitive advantage.

SEGMENTATION

• Precise satisfaction of customer needs: understanding of customers requirements, therefore by developing a distinct marketing mix for each segment of customers a marketers can offer better solutions for customer needs.

• Increased profits: By following an effective segmentation strategy a marketing firm can respond more effectively to the wants of potential buyers by meeting their needs through better positioning.

• Effective allocation of resources: Proper market segmentation results in effective allocation of resources, with help of target marketing communication in the form of promotions and advertisement customers will be able to identify the products.

• Retain customers: Meeting customer needs by delivering products or services according to their requirements through segmentation facilitates a marketing firm to retain that customer’s loyalty as their needs change.

• Segment leadership: Strong market leadership is very necessary to attain maximum profitability, through market leadership in a segment marketer can achieve economies of scale, in marketing, production and also have established access to distribution channels.

• Focused marketing communications: Market segmentation permits marketing firms to ascertain media channels that can particularly reach the target group and also delivers marketing message to a relevant audience.

According to William J. Stanton "Market segmentation in the process of dividing the total heterogeneous market for a good or service into several segments. Each of which tends to be homogeneous in all significant aspects."

Why segment?: Need, Purpose, objectives, significance and benefits of Segmentation

BASES OF SEGMENTATION

• Demographic Segmentation: Demographic segmentation divides markets into segments taking into considerations demographic factors such as gender, age, social class, family life cycle, gender, income, occupation, education, religion, race, generation, nationality. Etc.

• Behavioural Segmentation: Behavioural segmentation is based on product consumption-related behaviours and can include frequency, volume and type of product usage.

• Psychographic Segmentation: Effective marketing of a product requires a proper understanding of customers psychology, along with needs, this will ensure product acceptance by the consumer.

• Cross-Cultural Segmentation: Development in information and technology has paved way for globalization of economies and a new market place has developed.

• Geographic Segmentation: Geographic segmentation divide’s the target market according to geographical units such as nations, states, regions, counties, cities, or neighbourhoods.

• Socio-economic Segmentation: The term socio-economic refers to study of both social and economic conditions relevant to well-being.

CRITERIA FOR SEGMENTATION

1. Identifiable and Measurable: The information collected by the firm for segmentation variables such as size, purchasing power, and characteristics of the segments.

2. Substantial: After identifying and measuring the selected segment the next important parameter is to ensure that the selected segment is substantial, The market segment selected should be large enough, in terms of sales and profitability.

3. Accessible: The segment to selected must be effective in term reach, communication, distribution and servable.

4. Responsive: The major challenge in selecting a segmentation type is that the selected segment should have all resources to cater for the needs of the target customers.

5. Viable and Sustainable: It is important for a segment to be more practical and viable, if the segment is narrow in terms of reach then potential for sales growth will be limited and if it is too wide then it becomes difficult to develop marketing plans to suit all of the groups included in the segment.

6. Customers price sensitivity: Customer price sensitivity indicates the awareness and response of the customer to pricing of products or services at the time of making purchasing decisions.

7. Potential for substitution: The success of a segmentation strategy also depends on the substitutions already prevailing or that may develop in future.

8. Stage of industry life cycle: Understanding the industry life cycle is very import before deciding a segment for a simple reason that in the early stages of industry life cycle competition is very minimal .

STEPS IN SEGMENTATION PROCESS

• Profiling of customers• Identification of Segment• Evaluating segment attractiveness• Assessment of segment profitability• Segment positioning• Segment testing• Marketing-Mix Strategy

TARGETING

• Targeting is a strategy used by the marketers to assess the efficacy of each prospective segment and decide in which of these groups they will invest resources to try to turn them into customers. • Target market is the specific group of consumers

at which a company aims its products and services. Your target customers are those who are most likely to buy from you.

BASIC STRATEGIES FOR TARGET MARKET SELECTION

1. Selective Marketing (Differentiated Marketing): In selective target marketing strategy a firms opts and uses selective category of target customers to generate interest in a specific product categories while abandoning concentration on product category or class.

2. Mass Market Targeting (Undifferentiated Marketing): It is quite opposite to selective targeting, under this strategy a marketer offers a single product to the entire market and tries to capture all the potential consumer with single marketing plan.

3. Single Segment Targeting (Concentrated marketing): Developing a product that would appeal to a mass market is difficult as it must appeal to all customers and also marketing firm may not be able to cater the specific needs of the consumers. Therefore a firm may opt for Single Segment Targeting or Concentrated marketing. Single segment targeting focuses on use of single market coverage strategy wherein a product is developed and marketed for a very well-defined, specific and narrow consumer group.

POSITIONING

• Positioning is an act of creating a distinctive identity in the minds of target customers for marketer’s product, brand, or organization.

• Provides identity to marketer and its offerings• Demonstrates the effects on the consumer mind• Enhances brand value and goodwill• Influences consumer buying decision process• Justifies marketer’s claim

Role & importance of Positioning in Marketing

CONSUMER BEHAVIOUR

• Consumer behaviour indicates actions of consumers with reference to activities that take place to satisfy their needs, these activities−includes using products or services, processes used in selecting, securing of products or services, ideas or experiences.

Loudon and Bitta say, “Consumer behaviour is the decision process and physical activity engaged in when evaluating, acquiring, using or disposing of goods and services."

FACTORS INFLUENCING CONSUMER BEHAVIOUR

• Consumer behaviour is affected by situation and the consumer himself, i.e., internal and external factors.

• Internal factors refer to characteristics of individuals such as perception, motivation, learning, attitude, personality, age group and Lifestyle.

• External factors refer to situation and environment where the consumers interrelate, which can affect attitude, decisions and behaviour.

• Internal and external factors have important influence on consumer behaviour. However, external factors are more special. External factors are unpredictable and are influenced not only by economical situation in state but also in region and whole world.

INTERNAL INFLUENCES

• Culture• Subculture• Social class• Reference Groups• Opinion leaders• Gender roles• Physical environment• Economic Situation

EXTERNAL INFLUENCES

• Perception• Motivation• Learning• Attitudes• Personality• Age groups• Lifestyle• Income

THE CONSUMER DECISION-MAKING PROCESS

• Stage 1: Need recognition and awareness- In this stage, the consumer identifies and becomes aware of the need or problem. (Example: I am tired, I am hungry, I need a bike).

• Stage 2: Information search- Here, the consumer starts searching for information for providing a solution for the need or problem identified and responds to creative advertising messages that stimulate consumers to recognize that their current state .

• Stage 3: Evaluate alternatives- In this stage the consumer evaluates each alternative solution (Product) based on comparison with competing product alternatives, product attributes.

• Stage 4: Purchase Decision- In this stage, consumer decides on product to purchases and executes purchase, for this the consumer evaluates where to buy, when to buy and makes the purchase.

• Stage 5: Purchase Decision- In this stage, the consumer mentally evaluates purchase, if product meets expectations, consumer feels satisfied and if expectation is not, met consumer may suffer anxiety or regret. This evaluation decides whether the customer will purchase the product or brand again or not.

MARKETING MIX: OVERVIEW

• Marketing Mix is a combination of product, place, promotion, and pricing strategies designed to produce satisfying exchanges with predefined consumers. The components of marketing mix can be controlled by marketers to influence consumers to purchase its products.

MARKETING MIX

1. Product: Product is the actual offering of the marketer to its predefined consumers which also includes value added benefits. The offering can be in the form of tangible (goods) or intangible (services).

2. Price: Price is the value in monetary terms required to purchase a product or service. pricing is an important tool in marketing to attract, retain customer and to fight competition, further pricing of product or service is a key element in determining the profitability of business.

3. Place: Place represents distribution channel of a product that serve as the means for getting the product to the target customers. Distribution decisions include market coverage, channel member selection, logistics, and levels of service.

4. Promotion: Promotion helps marketers create and increase brand awareness, provide information about the products and services, increases volume of customers and builds sales and profits.

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