Marketing management

INTRODUCTION TO MARKETING MANAGEMENT

Chapter 1: Marketing Function

NEELA MULTANI

WHAT IS MARKETING? Marketing is identifying and meeting human and

social needs. In short, marketing is “meeting needs profitably.”

Philip Kotlar, a pioneer in marketing, defined marketing as: “Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.”

The American Marketing Association defined marketing as: “Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationship in ways that benefit the organization and its stakeholders.

MARKETING MANAGEMENT Marketing management is the art and

science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

OBJECTIVES OF MARKETING To satisfy needs, wants, and demand of

consumer and business. To provide value, quality and satisfactions.

MARKET AND MARKETERS A marketer is someone who seeks a response -

attention, a purchase, a vote, a donation - from another party, called the prospect. If two parties are seeking to sell something to each other, we call them both marketers.

Traditionally, A market was physical place when buyers and sellers gathered to buy and sell goods.

Economists describes a market as a collection of buyers and seller who transact over a particular product or product class (E.g. Housing market or grain market). Modern economies abound in such markets.

WHAT IS MARKETED? Goods e.g. cars, machines, watches, cosmetics Services e.g. restaurants Events e.g. world cup, Olympics Experiences e.g. amusement park, water park Persons e.g. celebrity marketing Places e.g. incredible India campaign Properties e.g. real estate Organizations e.g. Philips “sense and

simplicity” campaign Information e.g. schools, labs Ideas e.g. AIDS awareness, discourage smoking

ENGINEERS IN MARKETING Technical backgrounds Real understanding of the properties of the

product Understand the realities of production and

design on the product Helps in deciding pricing strategy

CHARACTERISTICS / FEATURES OF MARKETING Operational Customer-oriented Overall business philosophy Long-term survival Mutual benefits Business objective

CORE MARKETING CONCEPTS To understand the marketing function, we

need to understand the following core set of concepts.

1. Needs, Wants, and Demands2. Target Markets, Positioning, and

Segmentation3. Offerings and Brands4. Value and Satisfaction5. Marketing Channels6. Supply Chain7. Competition8. Marketing Environment

NEEDS, WANTS AND DEMANDS Needs are the basic human requirements.

E.g. air, food, water, clothing, shelter

Needs become wants when they are directed to specific objects that might satisfy the need. Wants are shaped by our society.

Demands are wants for specific products backed by an ability to pay.

NEEDS Five types of needs:1. Stated needs (The customer wants an

inexpensive car.)2. Real needs (The customer wants a car

whose operating cost, not its initial price, is low.)

3. Unstated needs (The customer expects good service from the dealer.)

4. Delight needs (The consumer would like the dealer to include an onboard navigation system.)

5. Secret needs (The customer wants friends to see him as a savvy consumer.)

TARGET MARKET, POSITIONING AND SEGMENTATION Marketers start dividing the market into segments.

They identify distinct group of buyers by examining demographic, psychographic, and behavioral differences of buyers.

After identifying market segments, the marketer then decides which present the greatest opportunity – which are its target market.

For each, the firm develops a market offering that it positions in the minds of the target buyers as delivering some central benefit(s).

E.g. Volvo for safety, Mahindra Scorpio luxury car (SUV)

OFFERING AND BRANDS Companies address needs by putting forth a

value proposition, a set of benefits that they offer to customers to satisfy their needs. Offering can be a combination of products, services, information, and experiences.

A brand is an offering from a known source.

VALUE AND SATISFACTION The offerings will be successful if it delivers

value and satisfaction to the target buyer.

Value reflects the sum of the perceived tangible and intangible benefits and costs to customers. (quality, service, price)

Satisfaction reflects a person’s judgments of a product’s perceived performance (or outcome) in relationship to expectations.

MARKETING CHANNELS To reach a target market, the marketer uses three kinds of

marketing channels.

Communication channels deliver and receive messages from target buyers. E.g., newspapers, magazines, radio, television, mail, telephone, posters, internet.

The marketer uses distribution channels to display, sell, or deliver the physical product or service(s) to the buyer or user. They include distributors, wholesalers, retailers, and agents.

Service channels to carry out transactions with potential buyers. They include warehouses, transportation companies, banks, and insurance companies.

SUPPLY CHAIN The supply chain is a longer channel

stretching from raw materials to components to final products that are carried to final buyers.

When a company acquires competitors or expands upstream or downstream, its aim is to capture a higher percentage of supply chain value.

COMPETITION Competition includes all the actual and

potential rival offerings and substitutes a buyer might consider.

E.g. car manufacturer may buy from TATA steel or Steel authority of India (SAIL) or from abroad; or buy aluminum for certain parts to lighten the car’s weight.

MARKETING ENVIRONMENT. . . The marketing environment consists of the task

environment and the broad environment.

The task environment includes the actors engaged in producing, distributing, and promoting the offering. These are the company, suppliers, distributors, dealers, and the target customers.

In the supplier group are material suppliers and service suppliers, such as marketing research agencies, advertising agencies, banking and insurance companies, transportation companies and telecommunication companies. Distributors and dealers include agents, brokers, manufacturer representatives, and others who facilitate finding and selling to customers.

. . . MARKETING ENVIRONMENT The broad environment consist of six components.

1. Demographic environment2. Economic environment3. Physical environment4. Technological environment5. Political-legal environment6. Social-cultural environment

Marketers must pay close attention to the trends and developments in these environments and make timely adjustments to their marketing strategies.

FUNCTIONS OF MARKETING. . . Marketing is not something to be done just by

the marketing department. The real task of doing marketing is delivering benefits to meet customer’s present and future needs – is part of everyone’s job.

Tasks in marketing- Setting marketing objectives Developing and implementing strategic

marketing plans Market and environmental analysis Conducting marketing research

. . .FUNCTIONS OF MARKETING. . . Designing the appropriate marketing mix- The service product itself Pricing policy Promotion and advertising Distribution systems People-customer service and marketing training

delivery process. Designing the service environment

o Marketing input in sales managemento Internal communicationso Integration with other departments

. . .FUNCTIONS OF MARKETING To achieve organizational objectives. The primary objective of marketing is the

realization of profit through customer satisfaction.

The important functions of marketing management are:

Marketing research Sales forecasting Marketing mix / 4 P’s in marketing Advertising Sales promotion Pricing

MARKETING PHILOSOPHIES – EVOLUTION OF MARKETING CONCEPTS Marketing philosophies explain the following

concepts.

1. The production concept2. The product concept3. The selling concept4. The marketing concept5. The societal marketing concept6. The holistic marketing concept

THE PRODUCTION CONCEPT Oldest concept in business.

This concept emphasizing on improving production process and it holds that consumers will prefer to buy products that are widely available and inexpensive.

Managers of production-oriented business concentrate on achieving high production efficiency, low costs, and mass distribution. Faster delivery leads to more customers.

This concept is also useful when a company wants to expand the market.

Example: The largest PC manufacture, LENOVO in China takes advantage of the huge inexpensive labour pool to keep costs and prices low, there by dominate the markets.

THE PRODUCT CONCEPT This concept emphasizes in product. It holds that

customers favor products that offer the most quality, performance, or innovative features.

Managers in these organizations focus on investing in research process, product development, manufacturing and engineering for making superior products and improving them over time.

A new product will not necessarily be successful unless it’s priced, distributed, advertised, and sold properly.

THE SELLING CONCEPT The goal is to increase sales volume and it holds

that consumers and business, if left alone, won’t buy enough of the organizations’ products.

Organizations must undertake an aggressive selling and promotion effort through advertisement and personal selling.

Also it explains How to sell the products in markets? Organization can attract the people or customer through providing some offers such as coupons, sales, 0% financial charge, instalment scheme, guaranties, warranties, sometimes provides home delivery.

THE MARKETING CONCEPT. . . It is based on customer-centered, “sense-and-

respond” philosophy. The goal of this concept is to address the customer needs and wants.

It holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering, and communicating superior customer value to its chosen target markets.

Manager focus on identifying customer needs wants, and preferences and market effectively to address those needs, wants and preferences.

. . . THE MARKETING CONCEPT Selling focuses on the needs of the seller; marketing focuses

on the needs of the buyers.

Selling is preoccupied with the seller’s need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and finally consuming it.

Companies that practices both a reactive and a proactive marketing orientation are implementing a total market orientation and are likely to be the most successful.

Example: Dell computer doesn’t prepare a perfect computer for its target market, but it provides product platforms on which each person customizes the features he desires in the computer.

THE SOCIETAL MARKETING CONCEPT. . . It holds that the organization’s task is to determine

the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors in a way that preserves or enhances the consumer’s and society’s long-term well-being.

Example: HP have introduced recyclable computers and printers and reduced greenhouse emissions.

The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices.

. . . THE SOCIETAL MARKETING CONCEPT Companies following this concept reducing

demand for a company’s own products, if that is in best interest of society.

Example: Philip Morris U.S.A. advertising the negative effects of smoking. The company has a youth smoking prevention department headed by a Senior Vice President; his role is to prevent youth from starting smoking and to help smokers to give up smoking.

THE HOLISTIC MARKETING CONCEPT This concept is based on the development, design, an

implementation of marketing programs, processes and activities that recognizes their breadth and interdependencies.

Holistic marketing recognizes that “everything matter” with marketing –and that a broad, integrated perspective is often necessary.

There are four broad components for characterizing holistic marketing:

1. Relationship marketing2. Integrated marketing3. Internal marketing4. Social responsibility marketing

Holistic marketing

Internal marketing

Integrated marketing

Performance marketing

Relationship

marketing

Marketing department

Senior management

Other department

sCommunications

Products &

servicesChannels

Partners Channel

Customers Community

Legal Environment

Ethics

Sales revenu

eBrand & customer

equity

RELATIONSHIP MARKETING. . . Relationship marketing aims to build mutually

satisfying long-term relationships with key constitutes in order to earn and retain their business.

Four key constitutes for relationship marketing are customers, employees, marketing partners (channels, suppliers, distributors, dealers, agencies), and members of the financial community (shareholders, investors, analysts).

The ultimate outcome of relationship marketing is a unique company asset called a marketing network.

. . . RELATIONSHIP MARKETING A marketing network consists of the company

and its supporting stakeholders – customers, employees, suppliers, distributors, retailers, ad agencies, university scientists, and others – with whom it has built mutually profitable business relationships.

Another goal of relationship marketing is to place much more emphasis on customer retention.

Attracting a new customer may cost five times as much as doing a good enough job to retain an existing one.

INTEGRATED MARKETING Integrated marketing, the marketer’s task is to devise marketing

activities and assemble marketing programs that maximize the ability to create, communicate, and deliver the value of customers.

McCarthy said the marketing mix tools in terms of four Ps. Such as Product, Price, Place, and Promotion.

Marketing mix decisions must be made for influencing the trade channels as well as the final customers.

Marketing mix is a set of controllable tactical and represents the seller’s view of marketing tools like product, price, place, and promotion that the firm blends to produce the response it wants in the target market.

The market mix consists of everything the firm can do to influence the demand for the product. The many possibilities can be collected into four groups of variables known as the “four Ps”.

THE 4 P’S IN MARKETING/MARKETING MIX The marketing mix is the set of controllable

variables that the firm can use to influence the buyer’s response.

The marketing mix and 4 Ps of marketing are used as synonyms for each other. In fact, they are not necessarily the same things.

PRODUCT Product refers to the goods and series offered

to customers.

The product can be subdivided into quality levels, special features, styling, branding, product range or mix, service back-up, warranty, durability packaging.

Combination of above is used for product. E.g. low quality product backed by a high service element.

PRICE Price refers to the amount charged for the

offered product or services. The right product should be offered at right place.

Price is a mechanism of exchange between firm and customer. It incorporates credit terms, discounts, margins, resources and financial services.

PROMOTION Promotion refers to advertising and selling

part of marketing i.e. informing potential customers of the availability of the product, its price and place.

Promotion includes two broad areas of advertising and personal selling.

Advertising – media/display/classified Merchandizing – promotional support for the

retailer Personal selling – salesman is special

discounts Publicity – press and public relations

PLACE Place refers to distribution channels used to

get your product to your customers.

Place make the product physically available. It includes distribution channel, outlet, warehouse, factory location, coverage stocks and freight.

The essence of managing the marketing mix lies in providing each group of customers with the mix of product, price, place and promotion which suits their needs.

LIMITATION OF FOUR P’S As the marketing mix comprises closely

interrelated elements, it is necessary to examine each to be clear about their respective roles.

Markets are dynamic and can be affected by a range of uncontrollable environmental variables.

Marketing has to devise strategies that take account of these variables using available marketing tools.

INTERNAL MARKETING Holistic marketing incorporates internal marketing, ensuring

that everyone in the organization embraces appropriate marketing principles, especially senior management.

Internal marketing is the task of hiring, training, and motivating able employees who want to serve customers well.

It takes two levels. One is the various marketing functions –sales force, advertising, customer service, product management, marketing research –must work together and be coordinated from the customers point of view.

At the second level, other departments must embrace marketing; they must also “think customer”. In fact, marketing thinking must be pervasive throughout the company.

PERFORMANCE MARKETING (SOCIAL RESPONSIBILITY MARKETING) Understand the ethical, environmental, legal and social context of

marketing activities and programs. Social responsibility deals with social problems and involving in social welfare.

It holds that the organizations tasks is to determine the needs wants and interests of target markets and to delivers the desired satisfaction to both consumer and society effectively than competitors.

The societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices.

Manager focus on identifying customer needs, wants, preferences and marketing analysis like efficiency.

Yet a number of companies, including Ben & Jerry’s have achieved notable sales and profit by adopting and practicing a form of the societal marketing concept called cause –related marketing.

It is an opportunity to enhance their corporate reputation, raise brand awareness, increase customer loyalty, build sales, and increase media coverage.

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