Marketing Management

Defining Marketing for the Twenty-First Century

The Chartered Institute of Marketing

„Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably‟

Adcock et al

The right product, in the right place, at the right time, and at the right price‟

Kotler 1980 Marketing is the human activity directed at satisfying human needs and wants through an exchange process‟ .

offering and exchanging products of value with others‟ .Kotler 1991 ‘Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating.

.  Learn the tasks of marketing.  Become familiar with the major concepts and tools of marketing.  Understand the orientations exhibited by companies.Objectives  Understand the new economy.

Objectives  Learn how companies and marketers are responding to new challenges. .

The New Economy  Consumer benefits from the digital revolution include: – Increased buying power. – Greater variety of goods and services. – Increased information. – Enhanced shopping convenience. . – Greater opportunities to compare product information with others.

The New Economy  Firm benefits from the digital revolution include: – New promotional medium. . – Access to richer research data. – Ability to customize promotions. – Enhanced employee and customer communication.

Challenges of Today’s Organization Change Govt. Interference Competition Organization Bigness Diversification Information Science & Tech Globalization .

What Can Be Marketed?  Goods  Services  Experiences  Events  Persons  Places  Properties  Organizations  Information  Ideas .

Product Places Goods Services Ideas Information Product Persons Properties Experiences Events Organizations .

offering. and freely exchanging products and services of value with others.” .Marketing Defined  Kotler‟s Social Definition: “Marketing is a societal process by which individuals and groups obtain what they need and want through creating.

pricing. promotion.Marketing Defined  The AMA Managerial Definition: “Marketing is the process of planning and executing the conception. and services to create exchanges that satisfy individual and organizational objectives. and distribution of ideas.” . goods.

Core Marketing Concepts  Target markets and market segmentation  Marketplace. marketspace. demands  Product offering and brand  Value and satisfaction  Exchange and transactions  Relationship and networks  Marketing channels  Supply chain  Competition  Marketing environment  Marketing program . wants. metamarkets  Marketers & prospects  Needs.

.Core Marketing Concepts  Target markets & segmentation – Differences in needs. – The segment served by the firm is called the target market. behavior. demographics or psychographics are used to identify segments. – The market offering is customized to the needs of the target market.

. water. recreation. air. (Fast food)  Demands are wants for specific products backed by an ability to pay. and entertainment.  Needs become wants when they are directed to specific objects that might satisfy the need. clothing. shelter.Core Marketing Concepts  Needs describe basic human requirements such as food. education.

Core Marketing Concepts  A Product is any offering that can satisfy a need or want. .  When offerings deliver value and satisfaction to the buyer. they are successful. while a brand is a specific offering from a known source.

– Raising benefits while lowering costs. – Raising benefits by more than the increase in costs. – Lowering benefits by less than the reduction in costs. . – Reducing costs.Enhancing Value  Marketers can enhance the value of an offering to the customer by: – Raising benefits.

Five conditions must be satisfied for exchange to occur.  Transaction involves at least two things of value. .Core Marketing Concepts  Exchange involves obtaining a desired product from someone by offering something in return. agreed-upon conditions. a time of agreement. and a place of agreement.

. which ultimately results in marketing network between the company and its supporting stakeholders.Core Marketing Concepts  Relationship marketing aims to build long-term mutually satisfying relations with key parties.

Core Marketing Concepts Marketing Channels  Communication channels  Distribution channels  Service channels  Deliver messages to and receive messages from target buyers. . non-verbal communication. and store atmospherics.  Includes traditional media.

Core Marketing Concepts Marketing Channels  Communication channels  Distribution channels  Service channels  Display or deliver the physical products or services to the buyer / user. .

 Distribution channels  Service channels .Core Marketing Concepts  Carry out Marketing Channels transactions with potential buyers by  Communication facilitating the channels transaction.

 Each company captures only a certain percentage of the total value generated by the supply chain. .Core Marketing Concepts  A supply chain stretches from raw materials to components to final products that are carried to final buyers.

– Promotion: communicates with customer.Marketing Mix  The marketing program is developed to achieve the company‟s objectives. – Place: customer convenience is key. . – Price: represents the customer’s cost. Marketing mix decisions include: – Product: provides customer solution.

Marketing Mix Mkt Mix Product Price Placement Promotion .

Marketing Mix  Product Product Variety Quality Design  Price List Price Discounts Allowances Payment Period  Promotion  Place Sales Promotion Advertising Sales Force Public Relations Publicity Channels Coverage Assortments Locations Inventory Features Brand Name Packaging Sizes Services Warranties Returns Transport .

Several competing orientations exist: – Production concept – Product concept – Selling concept – Marketing concept – Societal marketing concept .Competing Marketing Concepts  The orientation or philosophy of the firm typically guides marketing efforts.

Competing Marketing Concepts Production Concept Product Concept Marketing Concepts Marketing Concept Selling Concept Societal Marketing .

The Marketing Concept  Achieving organizational goals requires that company be more effective than competitors in creating. delivering.  Four pillars of the marketing concept: – Target market – Customer needs – Integrated marketing – Profitability . and communicating customer value.

Changes in the Marketplace  Globalization. and deregulation have created many challenges: – Customers – Brand manufacturers – Store-based retailers  Both companies and marketers have been forced to respond and adjust. . technological advances.

Levels of Competition  Four levels of competition can be distinguished by the level of product substitutability: – Brand competition – Industry competition – Form competition – Generic competition .

Levels of Competition Brand Industry Competition Form Generic .

Marketing Environment  Task Environment  Broad Environment .

Organization’s Environment Macro or Far Environment Near or Operating Environment Customers Partners Economic Factors Technological Factors Clients ORGANIZATION Suppliers Political Factors Social Factors Competitors .

Task Environment  Company  Suppliers  Distributors  Dealers  Target Customers  Competitors .

Broad Marketing Environment  The following forces in the Broad Environment have a major impact on the Task Environment: – Demographics – Economics – Natural environment – Technological environment – Political-legal environment – Social-cultural environment .

Demographic Environment  Population Age Mix  Population Growth  Ethnic Group  Education Status  Household Patterns .

Economic Environment  Income Distribution Subsistence Economies Raw Material Exporting Economies Industrializing Economies Industrialized Economies  Savings. Debt and Credit Availability .

Natural Environment  Shortage of Raw Materials  Increased Energy Costs  Increased Pollution Levels  Changing Role of Government .

Technological Environment  Accelerating Technological Change  Innovation Opportunities  Varying R&D Budgets  Regulations of Technological Change .

Political-Legal Environment  Legislation Regulating Business  Growth of Special Interest Groups .

Social-Cultural Environment  Beliefs  Values  Norms  Subculture .

SWOT Analysis  Strengths (Internal)  Weaknesses (Internal)  Opportunities (External)  Threats (External) .

SWOT Analysis Analysis SWOT .

Contents of the Marketing Plan – Executive Summary – Current Marketing Situation – Opportunity and issue analysis – Objectives – Marketing strategy – Action programs – Financial projections – Implementation controls .

Marketing Strategy  Segmentation  Positioning  Product Management  Pricing  Distribution  Marketing Communications  Marketing Research .

geographical location and buying attitudes or habits .Market Segmentation  Market Segment It consist of a large identifiable group within a market with similar wants purchasing power.

Levels of Segmentation  Niche Marketing  Local Marketing  Individual Marketing .

Patterns of Market Segmentation  Homogeneous Preferences  Diffused Preferences  Clustered Preferences .

Market Segmentation Procedure  Survey Stage  Analysis Stage  Profiling Stage .

Bases for Segmenting Market  Geographic  Demographic  Psychographics  Behavioral .

Characteristics of Effective Segmentation  Measurable  Substantial  Accessible  Differentiable  Actionable .

Product Positioning It is the act of designing the company‟s offering and image to occupy a distinctive place in the target market .

Major Positioning Errors  Under positioning  Over positioning  Confused positioning  Doubtful positioning .

Differentiation It is the act of designing a set of meaningful differences to distinguish the company‟s offering from competitor‟s offerings .

Dimensions/Basis of Differentiation  Product  Services  Personnel  Channel  Image .

Basis of Differentiation Product Image Service Channel Personnel .

Product Differentiation  Form  Features  Performance  Conformance  Durability  Reliability  Repair ability  Style & Design .

Product Differentiation
Form Features

Performance

Product

Conformance

Reliability

Style & Design
4-103

Service Differentiation
 Ordering Ease
 Delivery  Installation  Customer Training  Customer Consulting  Maintenance and Repair  Miscellaneous

Service Differentiation
Ordering Ease Delivery

Customer Training

Service

Customer Consultation

Warrantee/ Guarantee

Miscellaneous
4-103

Personnel Differentiation  Competence  Courtesy  Credibility  Reliability  Responsiveness  Communication .

Personnel Differentiation Personnel Differentiation Competence Courtesy Credibility Personnel Reliability Responsiveness Communication 4-103 .

Channel Differentiation  Coverage  Expertise  Performance .

Channel Differentiation Channel Coverage Expertise Performance .

Image Differentiation  Symbols  Media  Atmosphere  Events .

Image Differentiation Image Symbols Media Atmosphere Events .

Criteria for Worthful Differentiation  Important  Distinctive  Superior  Communicable  Pre-emptive  Affordable  Profitable .

services. experiences. organizations. It include goods. events.Product A product is anything that can be offered to a market to satisfy a want or need. persons. places. information and Ideas. . properties.

Product Life Cycle  Introduction  Growth  Maturity  Decline .

Product Levels  Core Benefit  Basic Product  Expected Product  Augmented Product  Potential Product .

Product Hierarchy  Need Family  Product Family  Product Class  Product Line  Product Type  Brand Name  Item .

Product Classifications  Durability and Tangibility  Consumer Goods  Industrial Goods .

Durability and Tangibility  Non-durable goods  Durable goods  Services .

Consumer Goods Classification  Convenience goods  Shopping goods  Specialty goods  Unsought goods .

Industrial Goods Classification  Materials and Parts  Capital Items  Supplies and Business Services .

A product mix has its Width Length Depth Consistency .Product Mix It is the set of all products and items that a particular seller offers for sale.

Product Line Decisions  Line Stretching Down-market Stretching Up-market Stretching Two-Way Stretching  Line Filling  Line Modernization  Line Featuring & Line Pruning .

intended to identify the goods or services of one seller and to differentiate them from competitors . symbol. sign. design. term.Branding  Brand It is a name. or a combination of them.

Meanings Conveyed by Brand  Attributes  Benefits  Values  Culture  Personality  User .

Advantages of Branding  Easy Selling  Legal Protection  Customer Loyalty  Easy Market Segmentation  Image Building .

Brand Sponsor Decision  Manufacturer Brand  Distributor Brand  Licensed Brand .

Brand Name Decision  Individual Name  Blanket Family Name  Separate Family Names for all products  Company Trade Name combined with Individual Product Names .

Brand Strategy Decision  Line Extension  Brand Extension  Multi-brands  New Brand  Co-brands .

Packaging It includes the activities of designing and producing the container for a product .

Levels of Packaging  Primary  Secondary  Shipping .

Advantages of Packaging  Self Service  Consumer Affluence  Company and brand image  Innovation Opportunity .

Labeling It may be a simple tag attached to the product or an elaborately designed graphic that is part of the package .

Functions of Label  Identification  Grading  Description  Promotion .

. Its production may or may not be tied to a physical product.Service It is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything.

Categories of Service Mix  Pure Tangible Good  Tangible Good with Accompanying Service  Hybrid  Major Service with Accompanying Minor Goods  Pure Service .

Characteristics of Services  Intangibility  Inseparability  Variability  Perishability .

Elements/Tools of Service Marketing Approach  Product  Price  Promotion  Placement  People  Physical Evidence  Process .

Marketing Strategy for Service Firms  External Marketing  Internal Marketing  Interactive Marketing .

Tasks of Service Companies  Managing Differentiation Offer Delivery Image  Service Quality  Productivity .

Determinants of Quality  Reliability  Responsiveness  Assurance  Empathy  Tangibles .

Common Features of Excellent Service Companies
 Strategic Concept
 Top Management Commitment

 High Standards
 Monitoring Systems

 Satisfying Customer Complaints
 Employees Satisfaction

Designing The Pricing Strategies
 Pricing Objectives
 Pricing Method

 Promotional Pricing
 Discriminatory Pricing

 Product Mix Pricing

Setting Pricing Objective
 Survival
 Maximum Current Profit

 Maximum Market Share
 Maximum Market Skimming

 Product Quality Leadership

Selecting a Pricing Method  Markup Pricing  Target Return Pricing  Perceived Value Pricing  Value Pricing  Going-rate Pricing  Sealed Bid Pricing  Psychological Pricing .

Price Discounts and Allowances  Cash Discounts  Quantity Discounts  Functional/Trade Discounts  Seasonal Discounts  Allowances .

Promotional Pricing  Loss-Leader Pricing  Special Event Pricing  Cash Rebates  Low Interest Financing  Longer Payment Terms  Warranties and Service Contracts  Psychological Discounting .

Discriminatory Pricing  Customer-Segment Pricing  Product-form Pricing  Image Pricing  Location Pricing  Time Pricing .

Product Mix Pricing  Product Line Pricing  Optional Feature Pricing  Captive Product Pricing  Two Part Pricing  By Product Pricing  Product Bundling Pricing .

Initiating and Responding to Price Changes  Initiating Price Cuts  Initiating Price Increases  Customer Reaction .

Responding to Price Change
 Maintain Price
 Maintain Price and add Value

 Reduce Price
 Increase Price and Improve Quality  Increase Price  Launch a Low Price Item

Developing Effective Communication
 Identify the Target Audience
 Determine the Communication Objective  Design the Message  Select the Communication Channel  Allocate Communication Budget

 Decide Communication Mix
 Measuring the Results

Marketing Communication Mix
 Advertising
 Sales Promotion

 Public Relations
 Personal Selling

 Direct Marketing

Promotional Objectives  Awareness  Knowledge  Liking  Preference  Conviction  Purchase .

Designing The Message  Message Content  Message Structure  Message Format  Message Source .

Message Content  Rational Appeals  Emotional Appeals  Moral Appeals .

Methods of Establishing Communication Budget  Affordable Method  Percentage of Sales Method  Competitive-Parity Method  Objective and Task Method .

Advertising Any paid form of non-personal presentation and promotion of ideas. goods or services by and identified sponsor .

Characteristics of Advertising  Public Presentation  Pervasiveness  Amplified Expressiveness  Impersonality .

Advertising Objectives  Informative Advertising  Persuasive Advertising  Reminder Advertising .

Decision on Advertising Media  Reach  Frequency  Impact .

Sales Promotion A variety of short-term incentives to encourage trail or purchase of a product or service .

Characteristics of Sales Promotion  Communication  Incentive  Invitation .

Sales Promotion Tools  Samples  Coupons  Cash Rebates  Price Packs  Premiums or Gifts  Prizes  Patronage Awards .

Sales Promotion Tools  Free Trials  Product Warranties  Tie-in Promotions  Cross Promotions .

Public Relations and Publicity A variety of programs designed to promote or protect a company‟s image or its individual products .

Characteristics of Public Relations and Publicity  High Credibility  Ability to catch buyers off guard  Dramatization .

Functions of PR Department  Press Relations  Product Publicity  Corporate Communication  Lobbying  Counseling .

Major Tools in Marketing PR  Publications  Events  News  Speeches  Public Service Activities  Identity Media .

Objectives of Marketing PR  Build Awareness  Build Credibility  Stimulate the Sales Force and Dealers  Hold Down Promotion Costs .

answering questions and procuring orders .Personal Selling Face to face interaction with one or more prospective purchasers for the purpose of making presentations.

Characteristics of Personal Selling  Personal Confrontation  Cultivation  Response .

Tasks of Sales Force  Prospecting  Targeting  Communicating  Selling  Servicing  Information Gathering  Allocating .

Sales Force Structure  Territorial  Product  Market  Complex .

Principles of Personal Selling  Professionalism  Negotiation  Relationship Marketing .

Direct Marketing It is an interactive marketing system that uses one or more advertising media to effect a measurable response or transaction at any time. .

Characteristics of Direct Marketing  Nonpublic  Customized  Up-to-date  Interactive .

Benefits of Direct Marketing  Time Saving  Easy Access to Information  Ordering Ease  Better Relationships  Less Cost .

Tools of Direct Marketing  Mail  Telephone  Fax  E-mail  Internet  Catalog Marketing  Telemarketing .

suppliers. distributors and ultimately customers who partner with each other to improve the performance of the entire system .Placement-Value Delivery Network The network made up of the company.

Marketing Channels A set of independent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user .

Functions of Marketing Channels  Information  Promotion  Contact  Matching  Negotiation  Physical Distribution .

Functions of Marketing Channels  Financing  Risk Taking .

Channel Level A layer of intermediaries that performs some work in bringing the product and its ownerships closer to the final buyer .

Level of Channels  Direct Marketing Channels  Indirect Marketing Channels .

the company sells directly to consumers .Direct Marketing Channel A marketing channel that has no intermediary levels.

Indirect Marketing Channel A channel containing one or more intermediary levels is called indirect marketing channel .

Types of Marketing Channels  Conventional Distribution Channel  Vertical Marketing System  Horizontal Marketing System  Multi-channel or Distribution System Hybrid .

Conventional Marketing System A channel consisting of one or more independent producers. wholesalers and retailers. each a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole .

. has contracts with them or has so much power that they all cooperate. wholesalers and retailers act as a unified system. One channel member owns the others.Vertical Marketing System A distribution channel structure in which producers.

Types of VMS  Corporate VMS  Contractual VMS  Administered VMS .

Corporate VMS A VMS that combines successive stages of production and distribution under single ownershipchannel leadership is established through common ownership .

Contractual VMS A VMS in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone .

Administered VMS A VMS that coordinates successive stages of production and distribution not through common ownership or contractual ties but through the size and power of one of the parties. .

Horizontal Marketing System A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity .

Multi-channel or Hybrid Distribution System A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments .

Marketing Intermediaries Strategies  Intensive Distribution  Exclusive Distribution  Selective Distribution .

Major Logistics Functions  Warehousing  Inventory Management  Transportation  Logistic Information Management .

Marketing Information Systems  Marketing Research  What is Marketing Research?  Process  Terminology  Techniques  MKIS .Marketing Information Systems  What is MKIS  Components of an electronic MKIS .

Marketing Research „The systematic gathering. recording and analysing of data about problems relating to the marketing of goods and services‟ American Marketing Association .

The Marketing Research Process  Set objectives  Define research Problem  Assess the value of the research  Construct a research proposal  Specify data collection method  Specify techniques of measurement  Select the sample .

The Marketing Research Process  Data collection  Analysis of results  Present in a final report .

already exists.subjective and personal  sampling .studying part of a „population‟ to learn about the whole .statistical basis  Qualitative research .collected firsthand  Secondary data . desk research  Quantitative research .Terminology of Marketing Research  Primary data .

Marketing Research Techniques
 Interviews
 face-to-face  telephone  postal

questionnaire

 Attitude measurement
 cognitive

component (know/believe about an act/object)  affective component (feel about an act/object)  co native component (behave towards an object or act)

Marketing Research Techniques
 Group discussion and focus group
 Postal research questionnaires  Diary panels - sources of continuous data  In-home scanning - hand-held light pen to scan barcodes  Telephone research  Observation

What is MKIS?
„MKIS (MIS) is a set of procedures and methods for the regular, planned collection, analysis and presentation of information for use in marketing decisions‟
American Marketing Association

The Components of a Computerised MKIS Data Bank Statistical Bank MKIS Display unit Marketing Manager Model Bank .

VDU and keyboard .raw data e.stores marketing models e. spending projections  A model bank . Boston Matrix  Display unit . secondary data  Statistical bank .programmes to carryout sales forecasts.The Components of a Computerised MKIS  Data bank .g Inventory Model.g historical sales data.

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