Understanding

Marketing Management
and
Marketing Environment
ModuIe-1
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ModuIe Content
Chapter-1: Defining Marketing for the
21
st
Century
Chapter-2: Developing Marketing
Strategies and Plans
Chapter-3: Gathering nformation and
Scanning the environment
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ModuIe Questions
Chapter-1
4 hy is marketing important?
4 hat is the scope of marketing?
4 hat are some fundamental marketing
concepts?
4 How has marketing management
changed?
4 hat are the tasks necessary for
successful marketing management?
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ModuIe Questions
Chapter-2
4 How does marketing affect customer
value?
4 How is strategic planning carried out at
different levels of the organization?
4 hat does a marketing plan include?
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Chapter-3
4 hat are the components of a modern marketing
information system?
4 hat are useful internal records?
4 hat is involved in a marketing intelligence
system?
4 hat are the key methods for tracking and
identifying opportunities in the macro
environment?
4 hat are some important macro environment
developments?
ModuIe Questions
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at is Marketing?
Marketing is an organizational function
and a set of processes for creating,
communicating, and delivering value
to customers and for managing
customer relationships
in ways that benefit the
organization and its stakeholders.
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"t is the process of planning &
executing
the conception, pricing, promotion &
distribution of ideas, goods & services
to create exchange that satisfy
individual
& organizational goals
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"A Social and Managerial process by
which individual and group obtain what
they need and want through creating,
offering and freely exchanging products
or services of value with other.
"Marketing is meeting or exceeding
customer needs profitably.
Marketing is understanding and
responding to customer needs.
Te Cartered Institute of Marketing
defines Marketing as -
"Marketing is the management process
for identifying, anticipating & satisfying
customer requirements profitably.
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at is 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.
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at is Marketed? (Scope)
Goods
4 all visible and tangibles like, Electronics, Furniture,
Hardware, automobile, watches, cosmetics, etc.
Services
4 All intangible and invisible like, Education, Banking,
nsurance, Haircutting, Airlines, Hotels,etc.
Events
4 PL, orld Cup, Trade Fair, Job Fair, Exhibitions,
etc.
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Persons
Celebrity marketing like Amitabh, Sachin, Shah
Rukh, Aishwarya, etc
PIaces
ncredible ndia, Kerala=God's Own Country,
Malaysia-Truly Asia, etc.
Properties
Real Estate and Shares, Stocks, Bonds,
Debentures, etc..
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Organizations
For brand building all organizations have to do
marketing.
Information
Encyclopedia, nformative ebsites, Discovery
and National Geography channels, etc.
Ideas
Promoting ADS awareness, discouraging smoking,
save water, save the girl child, etc.
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Demand States
Negative Demand
Nonexistent or No Demand
Latent Demand
Declining Demand
rregular Demand (Synchro Marketing)
Full
Overfull (De-Marketing)
Unwholesome
Negative Demand
Te market is in a state of negative demand
if; a major part of te market disIikes te
product and may even pay a price to avoid
it.
Eg: People have a negative demand for
Vaccination
The marketing task is to analyze, why the
market dislikes the products? And whether a
mktg program consists of product redesign, low
price, and more promotion can change the
belief and attitudes.
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No Demand
Target consumers may be uninterested in
te product.
E.g: *Farmers may not be interested in new
farming methods
*College students may not be interested in a
foreign language course.
The marketing task is to find ways to connect
the benefits of the products to the person's
natural needs and interests.
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Latent Demand
Many consumers may sare a strong need
tat cannot be satisfied by any existing
products.
Eg: *Latent demand for harmless cigarettes.
*Safer neighborhood.
*More fuel efficient cars.
The marketing task is to measure the size of
the potential market and develop effective
goods and services that would satisfy the
demand.
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DecIining Demand
A substantial drop in the demand for products.
Eg: *Boy scout enrolment among Singapore
students.
The marketing task is to:
i. Analyse the cause of market decline.
ii.Determine whether the demand can be
restimulated
by changing target markets, changing product
features and developing more effective goods.
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IrreguIar Demand
Organizations face demand that varies on a
seasonal, daily or even hourly basis, causing
problems of idle capacity or overcrowded
capacity.
Eg: *Markets :- visited on weekends, not on
weekdays.
The marketing task is called Synchro
Marketing (alter pricing, promotion & other
incentives)
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FuII Demand
Organizations face full demand when they
are pleased with there volume of business.
The marketing is to:
i. Maintain the current level of demand in the
face of changing consumer preferences and
increasing competition.
ii. Quality should be improved.
iii. Continuously measure consumer
satisfaction.
Eg: Maruti at the time of bookings made
open.
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OverfuII Demand
Some organizations face a demand level that is
higher then they can or want to handle.
Marketing task is De-marketing which requires
finding ways to reduce the demand temporarily or
permanently.
Steps involved in de-marketing:
i. Raising prices.
ii. Reducing promotion and service.
iii. Selective de-marketing(less profitable markets)
Eg: Quota system for new car registration by a fixed
percentage annually.
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UnwoIesome Demand
Unwholesome products will attract organized
effort to discourage their consumption.
Un-selling campaigns have been conducted
against cigarettes, alcohols, hard drugs,
handguns and pirated movies.
Te marketing task is to:
i. Use fear communication.
ii. Price hike.
iii. Reduced availability.
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Key Customer Markets
Consumer markets
Business markets
Global markets
Nonprofit/Government markets
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Company Orientations toward
MarketpIace
Production
Product
Selling
Marketing
The Holistic Marketing
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Production Concept
Holds that consumers favor those
products that are widely available and
low in cost.
Managers focuses more on production
efficiency, low cost, mass distribution.
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Product Concept
Holds that consumers favor those products
that offer most quality, performance or
innovative features.
Managers focuses on making superior
products and improving them overtime.
Managers commit "better mousetrap fallacy
by ignoring other aspects of marketing.
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SeIIing Concept
Holds that consumers, if left alone will
ordinarily not buy enough of the
organization's products.
The Managers must therefore
undertake an aggressive selling and
promotion effort.
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Marketing Concept
Holds that the key to achieving
organizational goals consists of the
company being more effective than
competitors in creating, delivering and
communicating superior customer
value to its chosen target markets.
Difference Between SeIIing &
Marketing
Selling starts with seller; Marketing with
buyer
Seller is the center of the business
universe; Buyer is the center
Try to sell what is made; try to make
what can be sold
Cost determines price; price
determines cost
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Difference Between SeIIing &
Marketing
Objective is profit maximization through
maximum sales; objective is profit
maximization through customer
satisfaction
Selling starts after production;
marketing before production
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Te HoIistic Marketing Concept
HoIistic Marketing is a term used to
describe a strategy that enables you to
look at your marketing efforts as a
'whole', which in turn helps you develop
an overall or 'holistic marketing' plan.
Holistic Marketing is the idea that
marketing is everything. t is the idea
that to truly be successful an
organization must have a holistic
approach to marketing where each
facet of the organization is focused on
how to add value to the customer and
communicate that value.
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Components of HoIistic Marketing
Relationship Marketing
ntegrated Marketing
nternal Marketing
Societal Marketing (Social
Responsibility Marketing)
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ReIationsip Marketing
t aims at building mutually satisfying
long term relationship with key parties-
like customers, suppliers, distributors,
and other marketing partners, in order
to earn and retain the business.
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Integrated Marketing
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InternaI Marketing
InternaI marketing is the task of hiring,
training, and motivating able employees
who want to serve customers well.
SocietaI Marketing Concept
The Societal Concept proposes that
the enterprise's task is to determine the
needs, wants and intentions of the
target market and to deliver the
expected satisfaction more effectively
and efficiently than the competitors in a
way to preserve or enhance the
consumer's and society's well being.
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Marketing Mix and te Customer
Four Ps
Product
Price
Place
Promotion
Four Cs
Customer solution
Customer cost
Convenience
Communication
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Core Concepts
Needs, wants, and
demands
Target markets,
positioning,
segmentation
Offerings and
brands
Value and
satisfaction
Marketing
channels
Supply chain
Competition
Marketing
environment
Marketing planning
Needs, ants & Demand
Needs are the basic human requirements.
People need food, air, water, clothing &
shelter to survive. People also have needs for
recreation, education and entertainment.
The needs become wants they are directed to
specific objects that might satisfy the needs.
Demands are wants for specific products that
are bagged by an ability and willingness to buy
them.
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Segmentation, Target markets &
positioning
Classification of markets based on consumer's
characteristics is called segmentation.
Choosing the segment with highest
opportunities and fit with our resources is
target marketing
Creating the distinct image of the product in
the mind of customer is called positioning
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Offering & Brand
Companies address needs by putting forth a
set of benefits they offer to customers to satisfy
their needs. This intangible value proposition
(proposes idea) is made physical by an
offering.
A brand is an offering from a known source. A
brand name carries many associations in the
mind of people.
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VaIue & Satisfaction
Value: Difference between the values the
customer gains from owning & using a
product & the costs of obtaining the product.
Satisfaction:- ith a purchase, how well the
product's performance lives up to the
customer's expectations.
Customers expectations must be set at the
right level of expectations, neither too low or
too high.
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Marketing CanneIs
Communication Channels
Distribution Channels
Service Channels
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SuppIy Cain
A longer chain stretching from raw materials
to components to final products that are
carried to final buyers.
t is a value delivery system
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Competition
t includes all the actual and potential rival
offerings and substitutes that a buyer might
consider.
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Marketing Environment
Task Environment:- Company, Suppliers,
Distributors & Target customers.
Broad Environment:- demographic,
Technological , legal-political, socio-cultural,
etc.
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Marketing PIanning
Analyzing the marketing opportunities
Selecting target markets
Designing marketing strategies
Developing Marketing programs
Managing Marketing efforts.
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Marketing Management Tasks
Develop market strategies and plans (2)
Capture marketing insights
4 Analyzing Environment (3)
4 Marketing Research (4)
Connect with customers
4 Creating Value, Satisfaction & Loyalty (5)
4 Understanding Consumer Market (6)
4 Understanding Business Market (7)
4 Segmentation, Targeting & Positioning (8)
Marketing Management Tasks
Build strong brands
4 Dealing with competition (9)
4 Creating the Brand Equity (10)
4 Creating the Brand Positioning (11)
Shape market offerings
4 Setting Product Strategy (12)
4 Designing and Managing Services (13)
4 Developing Pricing Strategies & Program (14)
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Deliver value
4 Designing and Managing value networks and
channels (15)
4 Managing Retailing, holesaling and Logistics (16)
Communicate value
4 Designing and Managing MC (17)
4 Managing Mass Communication (18)
4 Managing Personal Communication(19)
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Marketing Management Tasks
Creating Long Term Growth
4 ntroducing New Market Offering (20)
4 Tapping into global markets (21)
4 Managing a Holistic Marketing Organization (22)
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Marketing Management Tasks
Capter-2
DeveIoping Marketing
Strategies and PIans:
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Marketing and Customer VaIue
Te VaIue DeIivery Process
4 TraditionaI PysicaI Process Sequence
Make te product
Design, procure and make
SeII te product
Price, Sell, Promote, Distribute, Service
4 VaIue Creation & DeIivery Sequence
Coose te VaIue
Segmentation, Target, Positioning
Provide te VaIue
Product development, Service development, Pricing,
Sourcing, Distributing
Communicate te VaIue
Sales force, Sales Promotion, Advertising
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Japanese contribution in vaIue
deIivery
Zero customer feedback time
Zero product improvement time
Zero purchasing time
Zero setup time
Zero defects
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Tree V's Approac to Marketing
Define the value segment
Define the value proposition
Define the value network
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at is te VaIue Cain?
Michael Porter of Harvard proposed the
value chain as a tool for identifying
ways to create more customer value.
The vaIue cain is a tool for identifying
ways to create more customer value
because every firm is a synthesis of
5rimary and su554rt activities
performed to design, produce, market,
deliver, and support its product.
Te Generic VaIue Cain
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Firm's task is to examine its cost and
performances in each value-creating
activity and to look for ways to improve
it.
Firm should use -enchmarking .
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Core Business Processes
Market-sensing process: All the activities
involved in gathering marketing intelligence, disseminating it
within the organization, and acting on the information.
New-offering realization process: All the
activities involved in researching, developing, and launching
new high-quality offerings quickly and within budget.
Customer acquisition process: All the
activities involved in defining target markets and prospecting for
new customers.
Customer Relationship management
process: All the activities involved in building deeper
understanding, relationships, and offering to individual
customers.
Fulfillment management process: All the
activities involved in receiving and approving orders, shipping
the goods on time, and collecting payment.
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Caracteristics of Core Competencies
A source of competitive advantage
Applications in a wide variety of markets
Difficult to imitate
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at is a Marketing PIan?
A marketing pIan is the central
instrument for directing and coordinating
the marketing effort.
t operates at a strategic and tactical
level.
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LeveIs of a Marketing PIan
Strategic plan lays
out
4 Target marketing
decisions and
4 Value proposition
4 Based on analysis of
marketing
opportunities
Tactical plan
specifies
4 Product features
4 Promotion
4 Merchandising
4 Pricing
4 Sales channels
4 Service
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Corporate Headquarters'
PIanning Activities
Define the corporate mission
Establish strategic business units
(SBUs)
Assign resources to each SBU
Assess growth opportunities
Mission
An organization exists to accomplish
something. hen management senses that
the organization is drifting, it is time to renew
its search for purpose by asking:
hat is our business?
ho is our customer?
hat do customers value?
hat should our business be?
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Good Mission Statements
Focus on a limited number of goals
Stress major policies and values
Define major competitive spheres
Take a long-term view
Short, memorable, meaningful
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Major Competitive Speres
ndustry scope
Products scope
Competence scope
Market segment scope
Vertical channels scope
Geographic scope
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Rubbermaid CommerciaI Products, Inc.
"Our vision is to be the Global Market Share
Leader in each of the markets we serve. e
will earn this leadership position by
providing to our distributor and end-user
customers innovative, high-quality, cost-
effective and environmentally responsible
products. e will add value to these products
by providing legendary customer service
through our Uncompromising Commitment
to Customer Satisfaction.
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MotoroIa
"The purpose of Motorola is to honorably
serve the needs of the community by providing
products and services of superior quality at a
fair price to our customers; to do this so as to
earn an adequate profit which is required for
the total enterprise to grow; and by doing so,
provide the opportunity for our employees and
shareholders to achieve their personal
objectives.
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eBay
"e help people trade anything on earth.
e will continue to enhance the online
trading experiences of allcollectors,
dealers, small businesses, unique item
seekers, bargain hunters, opportunity
sellers, and browsers.
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TabIe 2.3
Product Orientation vs. Market Orientation
Company Product Market
Missouri-Pacific
Railroad
e run a railroad e are a people-
and-goods mover
Xerox e make copying
equipment
e improve office
productivity
Standard Oil e sell gasoline e supply energy
Columbia Pictures e make movies e entertain
people
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Dimensions tat Define a Business
Customer groups- target market
Customer needs
Technology
n case of expansion, target market can
be increased, provide better or more
products to same target, take help of
technology to innovate product.
A strategic business unit (SBU) is a
self-contained division, product line, or
product department in an organization
with a specific market focus and a
manager with complete responsibility
for integrating all functions into a
strategy.
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Caracteristics of SBUs
t is a single business or collection of
related businesses that can be planned
separately from the rest of the
company
t has its own set of competitors
t has a leader responsible for strategic
planning and profitability
Assessing Growt Opportunities
ntensive Growth
ntegrative Growth
Diversification
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Intensive Growt
Ansoff's Product-Market
Expansion Grid
4 Market penetration strategy
4 Market development strategy
4 Product development strategy
4 Diversification strategy
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Integrative Growt
Forward ntegration: enter into retailing
Backward ntegration: acquiring
suppliers
Horizontal ntegration: acquiring the
competitors
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Diversification Growt
Concentric Diversification: New products that
have technological and marketing synergies with existing line
appealing to new group of customers._ a company that
manufactures industrial adhesives might decide to diversify into
adhesives to be sold via retailers. The technology would be the
same but the marketing effort would need to change. t also
seems to increase its market share to launch a new product
which helps the particular company to earn profit.
Horizontal Diversification: New products that
have technologically unrelated with present line and could
appeal to existing customers.- company was making note books
earlier now they are also entering into pen market through its
new product.
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Conglomerate Diversification: No
relation with existing technology,
products or markets._ Kingfisher
Group; From Breweries to Airlines,
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Business Unit Strategic PIanning
1. The Business Mission
2. SOT Analysis
3. Goal Formulation
4. Strategy Formulation
5. Program Formulation
6. mplementation
7. Feedback and Control
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2. SOT AnaIysis
Strengths
eaknesses
Opportunities
Threats
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SOT AnaIysis
Opportunities
A major favorable situation in
a firm's environment
Treats
A major unfavorable situation in
a firm's environment
Strengts
A resource advantage relative
to competitors and the needs
of markets firm serves
eaknesses
A limitation or deficiency in one or
more resources or competencies
relative to competitors
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3. GoaI FormuIation and MBO
Unit's objectives must be hierarchical
Objectives should be quantitative
Goals should be realistic
Objectives must be consistent
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. Strategy FormuIation
Porter's Generic Strategies
4 Overall cost leadership
4 Differentiation
4 Focus
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Categories of Marketing AIIiances
A business aIIiance is an agreement between
businesses, usually motivated by cost reduction and
improved service for the customer.
Product or service aIIiance: One company licenses another to
produce its products.
PromotionaI aIIiance: One company agrees to carry a
promotion for another company's products
Logistics aIIiances: One company offers logistical services for
another company's products.
Pricing coIIaborations: One or more companies join in a
special pricing collaboration, such as airlines, hotel and car
rental companies join hands to offer attractive prices.
. Program FormuIation &
6. Program ImpIementation
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. Feedback & ControI
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Marketing PIan Contents
Executive summary
Table of contents
Situation analysis
Marketing strategy
Financial projections
mplementation controls
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EvaIuating a Marketing PIan
s the plan simple?
s the plan specific?
s the plan realistic?
s the plan complete?
Capter 3
Gatering Information and
Scanning te Environment
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at is a
Marketing Information System (MIS)?
A marketing information system
consists of people, equipment, and
procedures to gather, sort, analyze,
evaluate, and distribute needed, timely,
and accurate information to marketing
decision makers.
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TabIe 3.1 Information Needs Probes
hat decisions do you regularly make?
hat information do you need to make these
decisions?
hat information do you regularly get?
hat special studies do you periodically
request?
hat information would you want that you are
not getting now?
hat are the four most helpful improvements
that could be made in the present marketing
information system?
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InternaI Records and
Marketing InteIIigence
Order-to-payment cycle
Sales information system
Databases, warehousing, data mining
Marketing intelligence system
4 A set of procedures and sources managers
use to obtain information about
developments in the marketing
environment.
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Steps to Improve Marketing
InteIIigence
Train sales force to scan for new developments
Motivate channel members to share intelligence
Network externally
Utilize a customer advisory panel
Utilize government data sources
Collect customer feedback online
Purchase information
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Sources of Competitive Information
ndependent customer goods and service
review forums
Distributor or sales agent feedback sites
Combination sites offering customer reviews
and expert opinions
Customer complaint sites
Public blogs
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EnvironmentaI Forces
Macro Environmental Forces-
Uncontrollable
4 Demographic
4 Economic
4 Socio-cultural
4 Natural
4 Technological
4 Political-legal
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Demograpics Environment
Population growth
Population age mix
Literacy Level of population
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Economic Environment
ncome Distribution
Savings, Debt, and Credit
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SociaI-CuIturaI Environment
Beliefs, Values, Attitudes,
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TabIe 3.3 Most PopuIar
American Leisure Activities
Reading
TV atching
Spending time with
family
Going to movies
Fishing
Computer activities
Gardening
Renting movies
alking
Exercise
Listening to music
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NaturaI Environment
Shortage of raw materials lead to
development of substitute products
ncreased energy costs
Anti-pollution pressures like CNG, PUC
Certificate, etc,.
Copyright 2009 Pearson Education, nc. Publishing as Prentice Hall 3-105
TecnoIogicaI Environment
Pace of change
Opportunities for innovation
Varying R&D budgets
PoIiticaI Environment
Political Stability
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Micro EnvironmentaI Forces
Controllable Forces
4 Company- 4M, Departments
4 Suppliers- One force out of five forces,
Compete directly in future.
4 ntermediaries- Reseller, Physical Distri.,
Financial services
4 Customers- Consumer, Business,
Government, NGO
4 Competitors
4 Public
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End of Module 1
Copyright 2009 Pearson Education, nc. Publishing as Prentice Hall 1-108