Management is the process of getting Activities completed efficiently & effectively with & through other people.
Management is the act of getting people together to accomplish desired goals & objectives using available resources efficiently & effectively. 1 Functions of Management. Management has been described as a social process involving responsibility for economical and effective planning & regulation of operation of an enterprise in the fulfilment of given purposes. It is a dynamic process consisting of various elements and activities. These activities are different from operative functions like marketing, finance, purchase etc. Rather these activities are common to each and every manger irrespective of his level or status. Different experts have classified functions of management. According to George & Jerry, “There are four fundamental functions of management i.e. planning, organizing, actuating and controlling”. According to Henry Fayol, “To manage is to forecast and plan, to organize, to command, & to control”. Whereas Luther Gullick has given a keyword ’POSDCORB’ where P stands for Planning, O for Organizing, S for Staffing, D for Directing, Co for Co-ordination, R for reporting & B for Budgeting. But the most widely accepted are functions of management given by KOONTZ and O’DONNEL i.e. Planning, Organizing, Staffing, Directing and Controlling. For theoretical purposes, it may be convenient to separate the function of management but practically these functions are overlapping in nature i.e. they are highly inseparable. Each
function blends into the other & each affects the performance of others.
1.1 Planning. It is the basic function of management. It deals with chalking out a future course of action & deciding in advance the most appropriate course of actions for achievement of predetermined goals. According to KOONTZ, “Planning is deciding in advance - what to do, when to do & how to do. It bridges the gap from where we are & where we want to be”. A plan is a future course of actions. It is an exercise in problem solving & decision making. Planning is determination of courses of action to achieve desired goals. Thus, planning is a systematic thinking about ways & means for accomplishment of pre-determined goals. Planning is necessary to ensure proper utilization of human & nonhuman resources. It is all pervasive, it is an intellectual
activity and it also helps in avoiding confusion, uncertainties, risks, wastages etc.
1.2 Organizing. It is the process of bringing together physical, financial and human resources and developing productive relationship amongst them for achievement of organizational goals. According to Henry Fayol, “To organize a business is to provide it with everything useful or its functioning i.e. raw material, tools, capital and personnel’s”. To organize a business involves determining & providing human and nonhuman resources to the organizational structure. Organizing as a process involves:
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Identification of activities. Classification of grouping of activities. Assignment of duties. Delegation of authority and creation of responsibility. Coordinating authority and responsibility relationships.
1.3 Staffing It is the function of manning the organization structure and keeping it manned. Staffing has assumed greater importance in the recent years due to advancement of technology, increase in size of business, complexity of human behavior etc. The main purpose o staffing is to put right man on right job i.e. square pegs in square holes and round pegs in round holes. According to Kootz & O’Donell, “Managerial function of staffing involves manning the organization structure through proper and effective selection, appraisal &
development of personnel to fill the roles designed un the structure”. Staffing involves: Manpower Planning (estimating man power in terms of searching, choose the person and giving the right place). Recruitment, selection & placement. Training & development. Remuneration. Performance appraisal. Promotions & transfer.
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1.4 Directing It is that part of managerial function which actuates the organizational methods to work efficiently for achievement of organizational purposes. It is considered life-spark of the enterprise which sets it in motion the action of people because planning, organizing and staffing are the mere preparations for doing the work. Direction is that inertpersonnel aspect of management which deals directly with influencing, guiding, supervising, motivating sub-ordinate for the achievement of organizational goals. Direction has following elements:
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Supervision Motivation Leadership Communication
Motivation- means inspiring, stimulating or encouraging the sub-ordinates with zeal to work. Positive, negative, monetary, non-monetary incentives may be used for this purpose. Leadership- may be defined as a process by which manager guides and influences the work of subordinates in desired direction. Communications- is the process of passing information, experience, opinion etc from one person to another. It is a bridge of understanding. 1.5 Controlling It implies measurement of accomplishment against the standards and correction of deviation if any to ensure achievement of organizational goals. The purpose of controlling is to ensure that everything occurs in conformities with the standards. An efficient system of control helps to predict deviations before they actually occur. According to Theo Haimann, “Controlling is the process of checking whether or not proper progress is being made towards the objectives and goals and acting if necessary, to correct any deviation”. According to Koontz & O’Donell “Controlling is the measurement & correction of performance activities of subordinates in order to make sure that the enterprise objectives and plans desired to obtain them as being accomplished”. Therefore controlling has following steps:
α. β. χ.
Establishment of standard performance. Measurement of actual performance.
Comparison of actual performance with the standards and finding out deviation if any. S. Corrective action.
Levels of Management’ The term “Levels of Management’ refers to a line of demarcation between various managerial positions in an organization. The number of levels in management increases when the size of the business and work force increases and vice versa. The level of management determines a chain of command, the amount of authority & status enjoyed by any managerial position. The levels of management can be classified in three broad categories: 2.1 Top
level / Administrative level 2.2 Middle level / Executory 2.3 Low level / Supervisory / Operative / First-line managers Managers at all these levels perform different functions. The role of managers at all the three levels is discussed below:
LEVELS OF MANAGEMENT 2.1Top Level of Management It consists of board of directors, chief executive or managing director. The top management is the ultimate source of authority and it manages goals and policies for an enterprise. It devotes more time on planning and coordinating functions.
The role of the top management can be summarized as follows a. Top management lays down the objectives and broad policies of the enterprise. b. It issues necessary instructions for preparation of department budgets, procedures, schedules etc. c. It prepares strategic plans & policies for the enterprise. d. It appoints the executive for middle level i.e. departmental managers. e. It controls & coordinates the activities of all the departments. f. It is also responsible for maintaining a contact with the outside world. g. It provides guidance and direction. h. The top management is also responsible towards the shareholders for the performance of the enterprise. 2Middle Level of Management The branch managers and departmental managers constitute middle level. They are responsible to the top management for the functioning of their department. They devote more time to organizational and directional functions. In small organization, there is only one layer of middle level of management but in big enterprises, there may be senior and junior middle level management. Their role can be emphasized as i. They execute the plans of the organization in accordance with the policies and directives of the top management. j. They make plans for the sub-units of the organization. k. They participate in employment & training of lower level management.
l. They interpret and explain policies from top level management to lower level. m. They are responsible for coordinating the activities within the division or department. n. It also sends important reports and other important data to top level management. o. They evaluate performance of junior managers. p. They are also responsible for inspiring lower level managers towards better performance.
2.3Lower Level of Management Lower level is also known as supervisory / operative level of management. It consists of supervisors, foreman, section officers, superintendent etc. According to R.C. Davis, “Supervisory management refers to those executives whose work has to be largely with personal oversight and direction of operative employees”. In other words, they are concerned with direction and controlling function of management. Their activities include q. Assigning of jobs and tasks to various workers. r. They guide and instruct workers for day to day activities. s. They are responsible for the quality as well as quantity of production. t. They are also entrusted with the responsibility of maintaining good relation in the organization. u. They communicate workers problems, suggestions, and recommendatory appeals etc to the higher level and higher level goals and objectives to the workers.
v. They help to solve the grievances of the workers. w.They supervise & guide the sub-ordinates. x. They are responsible for providing training to the workers. y. They arrange necessary materials, machines, tools etc for getting the things done. z. They prepare periodical reports about the performance of the workers. aa. They ensure discipline in the enterprise. bb. They motivate workers. They are the image builders of the enterprise because they are in direct contact with the workers.
3.Qualities of a Manager
A Manager has got multidimensional traits in him which makes him appealing and effective in behaviour. Manager
Physical appearance- A leader must have a pleasing appearance. Physique and health are very important for a good leader. Vision and foresight- A leader cannot maintain influence unless he exhibits that he is forward looking. He has to visualize situations and thereby has to frame logical programmes. Intelligence- A leader should be intelligent enough to examine problems and difficult situations. He should be analytical who weighs pros and cons and then summarizes the situation. Therefore, a positive bent of mind and mature outlook is very important.
Communicative skills- A leader must be able to communicate the policies and procedures clearly, precisely and effectively. This can be helpful in persuasion and stimulation. Objective- A leader has to be having a fair outlook which is free from bias and which does not reflects his willingness towards a particular individual. He should develop his own opinion and should base his judgement on facts and logic. Knowledge of work- A leader should be very precisely knowing the nature of work of his subordinates because it is then he can win the trust and confidence of his subordinates. Sense of responsibility- Responsibility and accountability towards an individual’s work is very important to bring a sense of influence. A leader must have a sense of responsibility towards organizational goals because only then he can get maximum of capabilities exploited in a real sense. For this, he has to motivate himself and arouse and urge to give best of his abilities. Only then he can motivate the subordinates to the best. Self-confidence and will-power- Confidence in himself is important to earn the confidence of the subordinates. He should be trustworthy and should handle the situations with full will power. (You can read more about SelfConfidence at : Self Confidence - Tips to be Confident and Eliminate Your Apprehensions). Humanist-This trait to be present in a leader is essential because he deals with human beings and is in personal contact with them. He has to handle the personal problems of his subordinates with great care and attention.
Therefore, treating the human beings on humanitarian grounds is essential for building a congenial environment. Sympathy- It is an old adage “Stepping into the shoes of others”. This is very important because fair judgement and objectivity comes only then. A leader should understand the problems and complaints of employees and should also have a complete view of the needs and aspirations of the employees. This helps in improving human relations and personal contacts with the employees.
4.1 Management Skills
4.1Communication There’s a lot of communication when you’re a manager. You have to communicate with each of your employees. You have to communicate “sideways” with your co-workers and customers. And you have to communicate upwards with your own manager or executive. You need some substance in the communication, of course — you need to have something worthy of being communicated. But substance isn’t enough — if you know what you’re doing and can’t properly communicate it to anyone else, then you’ll never be a good manager. 4.2Listening Skills This is a part of communication, but I want to single it out because it’s so important. Some managers get so impressed with themselves that they spend much more of their time telling people things than they spend listening. But no matter how high you go in the management hierarchy, you need to be able to listen. It’s the only way you’re really going to find out what’s going on in your organization, and it’s the only way that you’ll ever learn to be a better manager.
4.3 A Commitment to the Truth You’ll find that the higher you are in the management hierarchy, the less likely you are to be in touch with reality. Managers get a lot of brown-nosing, and people tend to sugar-coat the news and tell managers what they want to hear. The only way you’ll get the truth is if you insist on it. Listen to what people tell you, and ask questions to probe for the truth. Develop information sources outside of the chain of command and regularly listen to those sources as well. Make sure you know the truth — even if it’s not good news. 4.4 Empathy This is the softer side of listening and truth. You should be able to understand how people feel, why they feel that way, and what you can do to make them feel differently. Empathy is especially important when you’re dealing with your customers. And whether you think so or not, you’ll always have customers. Customers are the people who derive benefit from the work you do. If no one derives benefit from your work, then what’s the point of keeping your organization around? 4.5 Persuasion Put all four of the preceding skills together, because you’ll need them when you try to persuade someone to do something you want done. You could describe this as “selling” but it’s more general. Whether you’re trying to convince your employees to give you a better effort, your boss to give you a bigger budget, or your customers to agree to something you want to do for them, your persuasion skills will be strained to their limits. 4.6 Leadership Leadership is a specialized form of persuasion focused on getting other people to follow you in the direction you want to go. It’s
assumed that the leader will march into battle at the head of the army, so be prepared to make the same sacrifices you’re asking your employees to make. 4.7 Focus The key to successful leadership is focus. You can’t lead in a hundred different directions at once, so setting an effective leadership direction depends on your decision not to lead in the other directions. Focusing light rays means concentrating the light energy on one spot. Focusing effort means picking the most important thing to do and then concentrating your team’s effort on doing it. 4.8 Division of Work This is the ability to break down large tasks into sub-tasks that can be assigned to individual employees. It’s a tricky skill — maybe more an art than a science, almost like cutting a diamond. Ideally you want to figure out how to accomplish a large objective by dividing the work up into manageable chunks. The people working on each chunk should be as autonomous as possible so that the tasks don’t get bogged down in endless discussion and debate. You have to pay careful attention to the interdependencies among the chunks. And you have to carefully assess each employee’s strengths, weaknesses and interests so that you can assign the best set of sub-tasks to each employee. 4.9 Obstacle Removal Inevitably, problems will occur. Your ability to solve them is critical to the ongoing success of your organization. Part of your job is to remove the obstacles that are preventing your employees from doing their best.
4.10 Heat Absorption Not all problems can be solved. When upper management complains about certain things that can’t be avoided (e.g., an unavoidable delay in a project deliverable), it’s your job to take the heat. But what’s more important, it’s your job to absorb the heat to keep it from reaching your employees. It’s the manager’s responsibility to meet objectives. If the objectives aren’t being met, then it’s the manager’s responsibility to: Make sure that upper management knows about the problem as early as possible. • Take all possible steps to solve the problem with the resources you’ve been given. • Suggest alternatives to management that will either solve the problem or minimize it. These other alternatives may propose the use of additional resources beyond the current budget, or they may propose a change in the objective that’s more achievable. • Keep the problem from affecting the performance or morale of your employees.
4.11 Uncertainty Removal When higher management can’t give you consistent direction in a certain area, it’s up to you to shield your employees from the confusion, remove the apparent uncertainty, and lead your employees in a consistent direction until there’s a good reason to change that direction. 4.12 Project Management This is a more advanced skill that formalizes some of attributes 7 – 11. Although both “Management” and “Project Management” contain the word “management,” they aren’t the same thing. Management implies a focus on people, while Project
Management implies a focus on the project objective. You can be a Manager and a Project Manager, or you can be a Manager without being a Project Manager. You can also be a Project Manager without being a Manager (in which case you don’t have people reporting to you — you just deal with overseeing the project-specific tasks). 4.13 Administrative and Financial Skills Most managers have a budget, and you’ll have to be able to set the budget and then manage to it. You’ll also have to deal with hiring, firing, rewarding good employee performance, dealing with unacceptable performance from some employees, and generally making sure that your employees have the environment and tools they need to do their work. It’s ironic that this is skill number 13 (an unlucky number in some cultures), because a lot of managers hate this part of the job the most. But if you’re good at budgeting, you’ll find it much easier to do the things you want to do. And hiring and dealing with employees on a day-to-day basis is one of the key skills to give you the best, happiest and most productive employees. Conclusion This article explains some of the things you’ll need to learn before you become a successful manager. You can probably become a manager without having all of these skills, but you’ll need all of them to be really successful and to get promoted to higher levels of management. For every one of these skills, there are various levels of performance. No one expects a new manager to be superior at every one of these skills, but you should be aware of all of them, and you should do everything you can to learn more about each skill. Some of that learning will come through education (like
reading the articles on this web site — you might want to subscribe). But much of the learning will come through experience — trial and error. Just learn as much as you can about each skill, take nothing for granted, and focus on doing the very best that you can do. Learn from your mistakes and try not to repeat them. And ask for feedback — in many cases you won’t know what you could do better unless someone tells you.
Marketing is "the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large Marketing is used to identify the customer, satisfy the customer, and keep the customer. With the customer as the focus of its activities, marketing management is one of the major components of business management. Marketing evolved to meet the stasis in developing new markets caused by mature markets and overcapacities in the last 2-3 centuries. The adoption of marketing strategies requires businesses to shift their focus from production to the perceived needs and wants of their customers as the means of staying profitable. The term marketing concept holds that achieving organizational goals depends on knowing the needs and wants of target markets and delivering the desired satisfactions. It proposes that in order to satisfy its organizational objectives, an organization should anticipate the needs and wants of consumers and satisfy these more effectively than competitors. For business to consumer marketing it is "the process by which companies create value for customers and build strong customer relationships, in order to capture value from customers in return". For business to business marketing it is creating value, solutions, and relationships either short term or long term with a company or brand. It generates the strategy that underlies sales techniques, business communication, and business developments. It is an integrated process through which companies build strong
5.How Marketing Evolved
The Marketing is a general term used to describe all the steps that lead to final sales. It is the process of planning and executing pricing, promotion and distribution to satisfy individual and organizational needs.From this definition it is easy to see that marketing is more than just process of selling a product or service. Marketing is an essential part of business, and without marketing, even the best products and services fail.Companies constantly fail because they do not know what is happening in the marketplace and as a result, they are not fully meeting their customer’s needs. They mistakenly believe that with the proper amount of advertising customers will buy whatever they are offered.Marketing consists of making decisions on the four P’s: • Product • Place/Distribution • Promotion • Pricing Before a business owner can make decisions on the four P’s,he/she must devise a plan. A plan provides a business with guidance on making decisions. This chapter includes directions on how to devise a plan that will assist in making decisions about the four P’s. This type of plan is a six stage process that is commonly referred to as strategic marketing; a
strategic marketing plan is an important part of a business plan.
Stage 1: 6.1 The Mission Statement
The first stage in strategic marketing is the development of a mission
statement. A mission statement is a brief description of a company, generally no more that a few lines, that describes where the company is and where it wants to go. A good mission statement should contain: • target customers/markets • principal products/services • geographic domain • core technologies used • commitment to survival, growth and profitability • key parts of the company’s philosophy • company self-concept • company’s desired images Do not expect a mission statement to be developed quickly. It generally takes various revisions before a complete mission statement is written.
Stage 2: 6.2 Overall Company Objectives Once a mission statement has been created, the company can develop objectives. Objectives are specific goals to be achieved by the business. They are plans that will help a company move toward the mission statement. A business normally creates both one- and three-year objectives. Examples of company objectives are: • To earn at least 20% after-tax rate of return on our net investment during this year • To make our cookies the best selling cookies in terms of units sold in Kansas 6.2.1 Types of Objectives 1. Profitability • Net profit as a percent of sales • Net profit as percent of total investment
• Net profit per share of common stock 2. Volume • Market share • Percentage growth in sales • Sales rank in the market • Production capacity utilization 3. Stability • Variance in annual sales volume • Variance in seasonal sales volume • Variance in profitability
6.2.2 Non-financial • Maintenance of family control • Improved corporate image • Enhancement of technology or quality of life 6.2.3 Each objective should meet the following basic criteria: Suitable: Do they fit with the corporate mission? Measurable: What will happen and when? Feasible: Are they possible to achieve? Acceptable: Do they fit with the values of the company and the employees? Flexible: Can they be adapted and changed should unforeseen events arise? Motivating: Are they neither too difficult nor too easy to achieve?
Understanding: Are they stated simply? Commitment: Are people committed to doing what is necessary to achieve them? Participation: Are the people responsible for achieving the objectives included in the objective-setting process? Companies need to ensure that they do not set too many objectives. When too many objectives are set, the company runs the risk of having objectives contradict and interfere with each other.
Stage 3: 6.3 Competitive Strategies Once a company has determined objectives a competitive strategy can be developed. A competitive strategy is developed so that a company can create advantages over the competition. 6.3.1 Examples of creating a competitive strategy include: • offering buyers a standard product at a lower price; or
• making the product different than the competition on attributes considered important to the customer. leadership can be achieved by: • producing on a large scale • designing products that are easy to manufacture • accessing low-cost raw materials • predicting a broad range of products • pursuing cost reductions in production, marketing, research and development, customer service, and the avoidance of marginal accounts
6.3.2 Differentiation Differentiation involves changing the product so it is perceived as unique. Change can be based on: • technical superiority • quality • customer support services • the appeal of more value for
the money 6.3.4 Niche marketing Niche Marketing occurs when a product is sold to a small number of total potential customers. The specialty market is often referred to as niche marketing, since products are marketed to a very small group of buyers. Niche marketing requires the business owner to identify customers with similar demands and serve their needs extremely well. Niche marketing implies that a company will take a lower overall market share, but possibly with higher profits on the product. Higher profits may be achieved by having higher prices or producing at lower costs.
Stage 4: 6.4 Marketing Objectives Marketing objectives can only be developed after stages one through three have been completed. Marketing objectives are designed to help a company attain overall objectives. The five basic marketing objectives are:
• to achieve a viable level of sales or market share • to increase market share • to maintain market share • to maximize cash flow • to sustain profitability Market share is a common term used in developing marketing objectives. It refers to the percentage of the total industry sales your company attains. For example, if a company sells 100 units of product, but total consumption for the good is 100,000 units, the market share is 1% (100/100,000). Stage 5: 6.5 Marketing Strategies Marketing strategies outline exactly how marketing objectives will be achieved. For example, if the marketing objective is to increase market share, the marketing strategy states exactly how the market share increase will occur. A marketing strategy is a way to give marketing orientation to a business by deciding to position a product or service in terms of buyer needs and wants. Inexperienced business people often make decisions based on what they like or want, leaving the customer out of the picture. A marketing orientation brings the customer into the center of the picture. The marketing objectives for profits, cash flow and market share can be achieved by increasing the number of users, increasing the rate of purchase, retaining existing customers or acquiring new customers. The following are examples of various types of marketing strategies. I. Increase the number of users by:
• building willingness to buy • increasing ability to buy II. Increase the rate of purchase by: • broadening usage occasions for the product • increasing level of consumption • increasing rate of replacement III. Retain current customers by: • maintaining satisfaction • meeting what competition offers • developing or increasing relationship marketing IV. Acquire new customers by: • line extensions (variations of existing products designed for existing markets) • leaders (lower prices on certain products to increase the sale of more expensive complements) • bundling (selling products - together, usually at a lower price than if bought separately) • head-to-head market dominance • head-to-head price/cost leadership • differentiating the product • serving a narrowly defined target market • flankers (new brands designed to serve new segments)
Stage 6: 6.6 Marketing Programs Marketing programs are the detailed approaches to the four P’s. (products, place, promotion and pricing). The approach for making decisions for each of the four P’s should closely follow the mission statement, company objectives, competitive strategies, marketing objectives and marketing strategies. Types of Promotion Promotion includes all activities designed to inform, persuade and influence people when they are making the decision to buy. Promotion is made up of: Advertising • non-personal communication transmitted through mass media Publicity • free promotion through news stories in newsletters, newspapers, magazines and television Sales Promotion • all forms of communication not found in advertising and personal selling, including direct mail, coupons, volume discounts, sampling, rebates, demonstrations, exhibits, sweepstakes, trade allowances, samples and point-of purchase displays In designing a promotional plan, clearly spell out: • Which objectives to use. It is possible to have more than one
objective, but it is recommended that a company target its audience or run the risk of losing focus. • What to say • Who to say it to • Criteria used to measure success
7.Marketing Environment Changes in the marketing environment profoundly affect a firm’s marketing operations. Legislative requirements, new technological developments, economic conditions, increased competition, the population changes worldwide, and political events around the world are some of the factors affecting Chrysler’s current and future marketing efforts. The long-term performance of Chrysler or any organization depends, in large part, on its ability to identify and respond effectively to the key changes in its marketing environment. The marketing environment consists of all factors external to an organization that can affect the organization’s marketing activities. These factors are largely uncontrollable, although marketers can influence some of them. For example,
Chrysler cannot control population trends, economic conditions, or laws once passed, but it can have some influence on political processes, technological developments, and competitive situations. All marketers face the difficult task of identifying the important elements of the marketing environment for their organization, assessing current and likely future relationships between these factors, and developing effective strategies for a changing environment. This task has become increasingly difficult in recent years as many elements of the marketing environment change rapidly and unpredictably. The objective of this chapter is to help you understand the important elements and relationships in the marketing environment. The Marketing Environment In the contemporary marketing framework diagrammed in Chapter One (Exhibit 1.9), the marketing environment appears in the outer circle. We now expand that framework by describing the major elements of the marketing environment. Exhibit 3.1 presents the addition of the social, economic, political/legal, technological, competitive, and institutional environments to the original diagram. The best way to understand the marketing environment is to place yourself in
the middle of the marketing circle. You are now a marketer for some organization and must make decisions about the marketing exchanges, strategies, activities, positions, and institutions employed by your organization. However, the decisions you can control depend on factors and trends in the marketing environment that you cannot control. Thus, your task as a marketer is largely to identify opportunities or threats in the marketing environment and then make marketing decisions that capitalize on the opportunities and minimize the threats. Creation of Market Opportunities and Threats The marketing environment creates opportunities or threats in two basic ways. First, changes in the marketing environment can directly affect specific markets. A market is a group of people or organizations with common needs to satisfy or problems to solve, with the money to spend to satisfy needs or solve problems, and with the authority to make expenditure decisions. Specific markets can be defined at many different levels. For example, Chrysler’s overall car market includes the new car, the sports car, the luxury car, and the minivan markets. Customers in each of these markets desire a specific type of car and have the money to spend to
satisfy that need and the authority to make the purchase decision. Changes in the marketing environment can make markets larger or smaller or sometimes create new markets. Market opportunities typically arise when markets increase in size or new markets are created. For example, population growth, increases in income, and lower interest rates should present market opportunities for Chrysler by expanding the pool of people who need some type of car and have the money to purchase one. Social changes, such as more women in the workforce.
8.Understanding Buying Behaviour.
Buying Behavior is the decision processes and acts of people involved in buying and using products. Need to understand:
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why consumers make the purchases that they make? what factors influence consumer purchases? the changing factors in our society.
Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm needs to analyze buying behavior for:
Buyers reactions to a firms marketing strategy has a great impact on the firms success. The marketing concept stresses that a firm should create a Marketing Mix (MM) that satisfies (gives utility to)
customers, therefore need to analyze the what, where, when and how consumers buy. Marketers can better predict how consumers will respond to marketing strategies.
8.1 Stages of the Consumer Buying Process Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity...discussed next. The 6 stages are:
Problem Recognition(awareness of need)--difference between the desired state and the actual condition. Deficit in assortment of products. Hunger--Food. Hunger stimulates your need to eat. Can be stimulated by the marketer through product information--did not know you were deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes. Information search-o o
Internal search, memory. External search if you need more information. Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc.
A successful information search leaves a buyer with possible alternatives, the evoked set. Hungry, want to go out and eat, evoked set is
3. 4. 5.
chinese food o indian food o burger king o klondike kates etc Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives or resume search. May decide that you want to eat something spicy, indian gets highest rank etc. If not satisfied with your choice then return to the search phase. Can you think of another restaurant? Look in the yellow pages etc. Information from different sources may be treated differently. Marketers try to influence by "framing" alternatives. Purchase decision--Choose buying alternative, includes product, package, store, method of purchase etc. Purchase--May differ from decision, time lapse between 4 & 5, product availability. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc. After eating an indian meal, may think that really you wanted a chinese meal instead.
1-800 #s gives the consumer a way of communicating with the marketer after purchase. This helps reduce cognitive dissonance when a marketer can answer any concerns of a new consumer. Return to Contents List 8.3 Types of Consumer Buying Behavior Types of consumer buying behavior are determined by:
Level of Involvement in purchase decision. Importance and intensity of interest in a product in a particular situation. Buyers level of involvement determines why he/she is motivated to seek information about a certain products and brands but virtually ignores others.
High involvement purchases--Honda Motorbike, high priced goods, products visible to others, and the higher the risk the higher the involvement. Types of risk:
• • •
Personal risk Social risk Economic risk
The four type of consumer buying behavior are:
Routine Response/Programmed Behavior--buying low involvement frequently purchased low cost items; need very little search and decision effort; purchased almost automatically. Examples include soft drinks, snack foods, milk etc. Limited Decision Making--buying product occasionally. When you need to obtain information about unfamiliar brand in a familiar product category, perhaps. Requires a moderate amount of time for information gathering. Examples include Clothes--know product class but not the brand. Extensive Decision Making/Complex high involvement, unfamiliar, expensive and/or infrequently bought products. High degree of economic/performance/psychological risk. Examples include cars, homes, computers, education. Spend alot of time seeking information and deciding. Information from the companies MM; friends and relatives,
store personnel etc. Go through all six stages of the buying process. Impulse buying, no conscious planning.
The purchase of the same product does not always elicit the same Buying Behavior. Product can shift from one category to the next. For example: Going out for dinner for one person may be extensive decision making (for someone that does not go out often at all), but limited decision making for someone else. The reason for the dinner, whether it is an anniversary celebration, or a meal with a couple of friends will also determine the extent of the decision-making.
9.Target Market Selection Target marketing tailors a marketing mix for one or more segments identified by market segmentation. Target marketing contrasts with mass marketing, which offers a single product to the entire market. Two important factors to consider when selecting a target market segment are the attractiveness of the segment and the fit between the segment and the firm's objectives, resources, and capabilities. 9.1 Attractiveness of a Market Segment The following are some examples of aspects that should be considered when evaluating the attractiveness of a market segment:
• • • •
• • •
Size of the segment (number of customers and/or number of units) Growth rate of the segment Competition in the segment Brand loyalty of existing customers in the segment Attainable market share given promotional budget and competitors' expenditures Required market share to break even Sales potential for the firm in the segment Expected profit margins in the segment
Market research and analysis is instrumental in obtaining this information. For example, buyer intentions, salesforce estimates, test marketing, and statistical demand analysis are useful for determining sales potential. The impact of applicable microenvironmental and macro-environmental variables on the market segment should be considered. Note that larger segments are not necessarily the most profitable to target since they likely will have more competition. It may be more profitable to serve one or more smaller segments that have little competition. On the other hand, if the firm can develop a competitive advantage, for example, via patent protection, it may find it profitable to pursue a larger market segment. 9.2 Suitability of Market Segments to the Firm Market segments also should be evaluated according to how they fit the firm's objectives, resources, and capabilities. Some aspects of fit include:
Whether the firm can offer superior value to the customers in the segment The impact of serving the segment on the firm's image
Access to distribution channels required to serve the segment The firm's resources vs. capital investment required to serve the segment
The better the firm's fit to a market segment, and the more attractive the market segment, the greater the profit potential to the firm. 9.3 Target Market Strategies There are several different target-market strategies that may be followed. Targeting strategies usually can be categorized as one of the following:
Single-segment strategy - also known as a concentrated strategy. One market segment (not the entire market) is served with one marketing mix. A single-segment approach often is the strategy of choice for smaller companies with limited resources. Selective specialization- this is a multiple-segment strategy, also known as a differentiated strategy. Different marketing mixes are offered to different segments. The product itself may or may not be different - in many cases only the promotional message or distribution channels vary. Product specialization- the firm specializes in a particular product and tailors it to different market segments. Market specialization- the firm specializes in serving a particular market segment and offers that segment an array of different products. Full market coverage - the firm attempts to serve the entire market. This coverage can be achieved by means of either a mass market strategy in which a single undifferentiated
marketing mix is offered to the entire market, or by a differentiated strategy in which a separate marketing mix is offered to each segment. The following diagrams show examples of the five market selection patterns given three market segments S1, S2, and S3, and three products P1, P2, and P3. Single Segment S1 S2 S3 P1 P2 P3 P1 P2 P3 Selective Product Market Specialization Specialization Specialization S1 S2 S3 P1 P2 P3 S1 S2 S3 P1 P2 P3 S1 S2 S3 P1 P2 P3 Full Market Coverage S1 S2 S3
A firm that is seeking to enter a market and grow should first target the most attractive segment that matches its capabilities. Once it gains a foothold, it can expand by pursuing a product specialization strategy, tailoring the product for different segments, or by pursuing a market specialization strategy and offering new products to its existing market segment. Another strategy whose use is increasing is individual marketing, in which the marketing mix is tailored on an individual consumer basis. While in the past impractical, individual marketing is becoming more viable thanks to advances in technology.
10.The marketing research process
The Marketing Research Process is an invaluable introduction to marketing research. The authors and leading market research practitioners have achieved a textbook that focuses on the process of conducting successful market research. The student is guided through this process in a logical and systematic way commencing with initial exploratory research and ending with media selection, planning and monitoring. In addition to this the European based examples and up-to-date nature of the book have ensured its popularity throughout four editions. This fifth edition has been updated to take account of changes within the dynamic marketing environment. Specifically there is greater coverage of: the impact of information technology and database marketing on the market research industry, business to business marketing research with an entirely new chapter devoted to this important topic, the international dimensions of marketing research. The Marketing Research Process has long been regarded as a practical text for marketing research. This new edition includes recent case material and end of chapter questions designed to test students' understanding. The book provides a sound foundation for the students of marketing research on degree programmers in universities and for those studying on professional courses in market research from the Market Research Society and the Chartered Institute of Marketing.
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Levels of Management
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Qualities of a Manager
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