Marketing Management

Module 1 : Core Concepts of Marketing and

Marketing Environment
I. Defining Marketing
What is Marketing?
Some Interesting Firsts in Marketing

If you check 1900 edition of the Webster’s

Dictionary of, you will not find the word
“marketing”! The word first appeared in the
dictionary in 1910 edition.

Marketing is thus only a little over 100 years

old.
What is Marketing?
Some Interesting Firsts in Marketing

The first Newspaper ad was in the year 1657 in England for a ‘coffee’.

The world’s first legally registered brand still exists….it is

What is Marketing?
Definitions

Marketing is the social process by which individuals and

groups obtain what they need and want through creating and
exchanging products and value with others. (Philip Kotler)

Marketing is not only much broader than selling; it is not a

specialized activity at all. It encompasses the entire
business. It is the whole business seen from the point of view
of the final result, that is, from the customer’s point of
view. (Peter Drucker).

Marketing consists of actions taken to build and maintain

desirable exchange* relationships. (Philip Kotler and
Gary Armstrong)

* Exchange here is defined as the act of obtaining a desired object from someone by offerning something in return.
II. Scope of Marketing
What gets Marketed?
Scope of Marketing

1. Marketing of Goods
From packaged food and
personal hygiene products
to…….

……Earth Movers and Large

aircrafts…..

…All forms of goods require

marketing.
What gets Marketed?
Scope of Marketing
1I. Marketing of Services

From packaged Financial

Institutions and Airline Service
providers to…….

……Housekeeping services and

hair cutting salons…..

…All forms of services require

marketing.
What gets Marketed?
Scope of Marketing
1II. Marketing of Experiences

Think of it….

……what is Disneyland or tour

operates offering Bungee Jumping
doing?

…They are marketing

“experiences” to us.
What gets Marketed?
Scope of Marketing
1V. Events

From Sporting events and Award

Ceremonies....

……to trade shows like Vibrant Gujrat

and Auto Expo….

…we witness Events being marketed

all the time.
What gets Marketed?
Scope of Marketing
1V. Persons

Ab ki baar Modi Sarkaar….

..‘Master Blaster’ Sachin

Tendulkar..

‘King Khan’ Shah Rukh

..These are names and titles we recognize

because of active marketing of ‘Persons’.
What gets Marketed?
Scope of Marketing
V. Places
Places are marketed as….

Attractive tourist destinations..like

Incredible India.

Or on the basis of distinctive

capabilities of the place…like
German Techonology, or Swiss
Chocolates etc.
What gets Marketed?
Scope of Marketing
VI. Properties
Properties could be…

…tangible like Real Estate..

…or intangible like Financial properties

(Stocks/ Shares , bonds etc).
What gets Marketed?
Scope of Marketing
VII. Organizations
From NGOs like WWF and CRY….

…to large Businesses like Intel and Tata

Steel….

…indulge in Marketing of their

‘Organization’ or ‘Corporate’.
What gets Marketed?
Scope of Marketing
VIII. Information
Universities and Educational Institutions..

..News Agencies like Thomson Reuters and

search engines like Google..

…are engaged in marketing information.

What gets Marketed?
Scope of Marketing
IX. Ideas
Social messages like “Say no to drugs”,
“don’t drink and drive”, “save the
environment” are all ‘ideas’ that are
marketed.

Some days on the calendar are

dedicated to certain ideas, like “world
hear day” is dedicated to the idea of
maintaining a healthy heart,Valentines
Day the idea of love etc.
What gets Marketed?
Scope of Marketing

Goods Services Experiences

Events People Places

Properties Information Ideas

III. Evolution of Marketing
Evolution of the Marketing Concept
The Production Concept : Sasta banao, Sab
jagah pe becho to bahut saara apne aap bikega”
This concept assumed that the Consumers
are mostly interested in the product being
available at low prices. Thus the focus is to
achieve cheap, efficient production and
intensive distribution
The Marketing Concept : “Pata karo kya
chahiye, use sundar aur tikaoo banao aur sahi
daam par becho”
Find out the needs and wants of a specific
target market and deliver satisfaction levels
better than competition. “Make what you can
sell, don’t try and sell what you can make”.
The Product Concept : “Sundar aur tikaoo
banao, to bahut saara apne aap bikega”
This concept assumed that Consumers buy the
highest quality, the best performance & most
features. Thus the focus is to keep adding to
quality and features of the product, whether or
not the consumer is really looking for it.
The Selling Concept : “Bechoge to hi bikega”
This concept assumed that the Consumers if
left alone will not buy enough of a Firm’s
product.The firm must undertake aggressive
selling and promotion effort and that
consumers need to be coaxed into buying.
Evolution of the Marketing Concept
Differentiating between the Selling Concept and Marketing Concept

The Selling Concept

Factory Products Selling and Profits through

Promoting sales volumes

The Marketing Concept

Profits through
Customer Integrated
Target Market Customer
Needs Marketing
satisfaction
Evolution of the Marketing Concept
Buyer’s Market v/s Seller’s Market
Evolution of the Marketing Concept
Societal Marketing Concept and Holistic Marketing Concept
IV. Core Marketing Concepts
IV. Core Marketing Concepts
A) Types of Market
‘Market’
The term ‘market’ is often used to cover various groupings of customers.

I need to
I need to
lose
find a job
weight

Examples of
“Needs”
markets
‘Market’
The term ‘market’ is often used to cover various groupings of customers.

The The
apparels automobile
market market

Examples of
“Products”
markets
‘Market’
The term ‘market’ is often used to cover various groupings of customers.

The The ‘HNI’

‘Youth’ or affluent
market market

Examples of
“Demographic ”
markets
‘Market’
The term ‘market’ is often used to cover various groupings of customers.

The The
‘South’ ‘Americian’
market market

Examples of
“Geographic”
markets
‘Market’
The term ‘market’ is often used to cover various groupings of customers.

“Needs” “Products” “Geographic”

markets markets markets

“Voter” “Labour”
markets markets

ETC……
‘Market’
Marketplace

Marketplace refers to the ‘physical’ market places that one visits to buy things….ranging from the
local vegetable shops to the Stock Exchange markets
‘Market’
Marketspace

‘Marketspace’ refers to the digital markets, where in the new economy, you can buy everything
from vegetables to financial instruments.
‘Market’
Structure of flows in Modern Exchange Economy

Resources Resources
Money Resources markets Money

Taxes, Services,
Goods Money
Services, Money Taxes
Manufacturer
Government Markets Consumer markets
markets
Taxes, Goods Services
Services, Taxes,
Money Goods
Money Money
Goods and Services Intermediary markets Goods and Services
IV. Core Marketing Concepts
B) Basic Terminology
Basic Terminology
Marketer and Prospects

Marketer : Prospect

A marketer is anybody who is seeking a Prospects are people from whom the marketer
response. A response in the form of…. is expecting the response in the form of….

Etc… Etc…
Basic Terminology
Target Market and Segmentation

If Marketers are people who are looking for a particular type of response, it is almost impossible
to get the desired response from EVERYBODY.

Marketers therefore start by dividing up the market by identifying distinct groups of consumers
who might prefer or require varying product and services mixes. The divisions are known as
“Market Segments”.

Market Segments can be identified by examining demographic, psychographic and behavioral

differences among consumers.

The marketer then decides which market segment to target. This forms their ‘target market’.
Basic Terminology
Needs, Wants and Demand

Needs : Wants : Demand :

Needs are basic
requirements like food, air,
water and shelter.
Requirements that required
to survive.
Needs become wants, when A want becomes a demand
the are directed to specific when it is backed by the
objects to satisfy the need. ability to pay.
Basic Terminology
Needs, Wants and Demand

Types of Needs and Wants

Stated Needs : Real Needs : Unstated Needs : Delight Needs : Secret Needs :

“I need a large The customer Customer wants Customer wants The customer
and comfortable wants a house to live in a premium wants to take
house for my with many community / bathroom fittings care of the aged
family and aged bedrooms for a apartment and and modular parents but want
parents” joint family. not an individual kitchens to be extra privacy and
house. fitted by the do not want to
builder. admit it.

3BHK + 2BH attached

Basic Terminology
Value and Satisfaction
Value : Consumers choose the product that they perceive offers maximum ‘value’ .
Customer Value Triad
Value is primarily a
combination of three
aspects of the product :
- Quality
- Service
- Price
The Value Equation
Value = Benefits / Costs.
Where:
Benefits = Functional
Benefits + Emotional
Benefits
Costs = Monetary + Time
+ Energy + Psychic costs
Satisfaction
Higher the value, higher the
satisfaction.
A marketer can increase
satisfaction by:
- Raising benefits or (&)
reducing costs.
- Raise benefits by more
than raise in cost or Lower
benefits by less than the
reduction in costs
Basic Terminology
Value proposition, Offering and Brand
Value Proposition :
A set of benefits they offer to
customers to satisfy their
needs.
Value Proposition : We
will fill your stomach.
Offering : Brand :
The intangible value A brand is an offering from a
proposition is made physical known source.
by an offering, which can be
a combination of products,
services, information and
experiences.
McDonalds : Burger from
Offering : Burger
a known source
Basic Terminology
Marketing Program

Marketing Program refers to the

numerous decision that an company
takes to decide on the Marketing
Mix using various marketing Tools.
Basic Terminology
Marketing Program
Basic Terminology
Marketing Mix (4 Ps of Marketing)

The concept of Marketing Mix is the MAINSTAY of this course. We will be looking at each aspect
of the marketing mix in detail over the next few months. Here is primer:
Marketing Mix
Product 4 Ps of Marketing
Place
- Product Variety - Channels
- Quality - Coverage
- Design - Assortments
- Features Promotion - Locations
- Brand Image Price
- Sales Promotion - Inventory
- Packaging - List Price
- Advertising - Transport
- Sizes - Discounts
- Sales force
- Services - Allowances
- Public Relations
- Warranties - Payment Period
- Direct
- Returns - Credit Terms
Marketing
Basic Terminology
Marketing Mix from Customer Perspective (4 Cs of Marketing)

The 4Ps of marketing represent the marketer’s point of view. These correspond to the customer
as:
4Ps 4Cs

Product Customer Solution

Price Customer Cost

Placement Convenience

Promotion Communication
Basic Terminology
Marketing Channels

Communication Channels: Distribution Channels : Service Channels :

Communication channels Distribution channels are Service channels include
deliver and receive messages used to display, sell, or deliver warehouses, Banks (which help in
from target buyers. the product or service to the transactions), transport companies.
buyer or user.

ETC… ETC…
Basic Terminology
Supply Chain

The ‘chain’ through which raw Supply Chain = Value Delivery

materials are converted into Network
finished goods and delivered to
customers.
Basic Terminology
Competition

All those entities who are fulfilling very

similar needs and wants
Basic Terminology
Competition

All those entities who are fulfilling very

similar needs and wants
IV. Core Marketing Concepts
C) Marketing Environment
Marketing Environment
Micro-Environment
Marketing Management’s job is to build relationships with customers by creating customer value and satisfaction.
Marketing managers cannot do this alone and have to take the support of all the stakeholder in the company’s
‘Micro-Environment’.
The Company’s Micro-environment

Marketing
Suppliers Customers Competitors
Intermediaries

The Company Marketing Publics

Marketing Environment
Micro-Environment
Company Group Marketing Role
Sets the Company’s Mission,Vision and Objectives and other
Top Management
broad policies

Support in allocating budgets and tracking the financial

Finance
efficiencies of marketing programs.

Research and Creating market and customer oriented innovative products.

Development

Work towards meeting commitments towards customers in

Production & Operations terms of schedules and quality.

HR and Other Support Under the marketing concept, all departments must work
Functions towards superior customer value and satisfaction.
Marketing Environment
Micro-Environment

Supplier : Firms that provide the resources needed for a company to produce its good and services.

Most marketers today treat their suppliers as partners in creating and delivering customer value.
Marketing managers must watch supply availability – supply shortages or delays, labor strikes, and
other events can cost sales in the short run and damage customer satisfaction in the long run.
Marketing Environment
Micro-Environment
Marketing Intermediaries : Firms that help in company to promote, sell and distribute its goods to final
buyers.

Resellers Physical distribution co.s Marketing Partners Marketing Agencies

Marketing Environment
Micro-Environment

Customers : The company needs to study the different customer markets to understand environment

Customer Markets

Government
Business Market Reseller Market
Market

Types of
International
Consumer Market Customer
Market
Markets
Marketing Environment
Micro-Environment

Competitor : The company’s growth and profits depend on providing and maintaining greater customer value
and satisfaction than its competitors do. This makes it important to understand the competitors marketing
strategy and creating a marketing strategy that is both: a) counters the competitor’s marketing strategy and b) in
line with the company’s overall objectives and strategies.
Marketing Environment
Micro-Environment
Publics : A public is any group that has an actual or potential interest in or impact on an organization’s ability
to achieve its objectives. E.g. Financial publics like banks, Media publics like newspapers and TV, Govt. Publics,
General Publics and Internal Publics etc.
The ‘Marketing Concept’ is slowly giving way to the ‘Societal concept’ with increased attention being paid by
marketers on aspects on ‘Corporate Social Responsibility’ (CSR).
Marketing Environment
Macro - Environment

The Company and all of the other actors operate in a larger macro environment of forces that share
opportunities and pose threats to the company.

The Company’s Macro-environment

Technological
Economic Forces Natural Forces Political Forces
Forces

Demographic
Company Cultural Forces
Forces
Marketing Environment
Macro - Environment
Demographic Environment : Demographics is the study of human population in terms of size, density,
location, age, gender, income level, occupation etc.

Structure of Population Changing Occupations

The aging Chinese In comparison, over 44% In 2007, the Service Sector surpassed the
population : by 2024, of Indians will be below Agriculture sector as the largest employer in the
58% of Chinese will be the age of 30. world.
above 40 years How does this difference in changing
How does this difference in the structure of structure of occupation affect
population impact marketers? marketers?
Marketing Environment
Macro - Environment
Economic Environment : The economic environment consists of factors that affect consumer purchasing
power and spending patterns.

Changes in Income levels Changing Consumer spending patterns

Fig 1.1 : Global Billionares

2000 $6.6 7
1637
Number of Billionaires

Wealth of Billionaires (USD

$5.4 6
1500 $4.7 1426
1226 5
4
1000
3

Trillion)
500 2
1
0 0
2012 2013 2014 (Jun)

US$ Trillion Number of Billionaires

As purchasing power goes up, consumption patterns
change from essentials to non-essential items / variants.
Marketing Environment
Macro - Environment
Natural Environment : Involves natural resources that are needed as inputs by marketers or that are affected
by marketing activities.
Increased Pollution and Government
Shortage of Raw materials
Intervention

All natural resources are finite and are currently being With increasing pollution levels, governments across
stretched…air, water, oil, minerals…all resources are the world are creating a number of stringent
scarce and being stretched and squeezed. environmental control measures.
How does this impact marketers? How does this impact marketers?
Marketing Environment
Macro - Environment

Technological Environment : This is perhaps the most dramatic force impacting markets.

From tracking meteors to the milking
cows, technology has changed the
world we live in.
Some of the most popular & valuable brands
Technology increasingly available
today are Technology brands –indication of
to all social-economic strata
impact of technology on the marketing world
Marketing Environment
Macro - Environment
Political Environment : The political environment consists of laws, government agencies and pressure groups
that influence or limit various organizations and individuals in a given society.
Marketing Environment
Macro - Environment
Marketing Environment
Macro - Environment
Cultural Environment : The cultural environment is made of institutions and other forces that affect a
society’s basic values, perceptions, preferences, and behaviors.

The cultural environment is in a strange

state of flux – while there is a persistence of
cultural values on the one hand, on the
other there is a openess to try new things
from varied cultures.
Fusion foods to Fusion bridal wear are a one
of the marketing impacts of this
environmental force.

What are the other impacts of the

Cultural Environment on marketing?
Marketing Environment
Macro - Environment

Changing cultural
setting….
Marketing Environment
Marketing in the New Economy : Digitalization and Connectivity

Analog Technology Digital Technology Connectivity

Analog devices necessitate With Digitization, accessing With Connectivity, the entire
step-by-step processes. everything from music to files world of digitized data
did not require a step by step becomes easily accessible.
process.
Marketing Environment
Marketing in the New Economy : Dis-intermediation and Re-intermediation

Dis-intermediation
Digitalization and connectivity led to the
disintegration of many traditional middle-
men (intermediaries), as marketers started
reaching out to their customers directly.
Re-intermediation
On the other hand, new business models gave
birth to a whole new set of ‘re-
intermediations’ or different kinds of
intermediaries. Courier companies, online
aggregators etc.
Marketing Environment
Marketing in the New Economy :The birth of new Business Domains
B2C and B2B:
Earlier, the 2 main business
domains were
- Business to Customers
(B2C) : e.g. FMCG
Companies, White goods
manufacturers etc.
- Business to Business
(B2B) : e.g. Tata Steel, Intel
etc.
C2B :
Customer to Business (C2B) :
With Digitalization and
Connectivity, a new domain,
called C2B was formed.
The increased connectivity
allows customers to directly
engage with even large
businesses.
C2C :
Customer to Customer
(C2C) : The internet has be
converted into a virtual
marketplace where individual
customers can sell to other
individuals.
Ebay, OLX, Quickr etc. are all
a part of this revolution of
C2C.
V. The Marketing Process
Marketing Process

Assess Market Communicate

Choose Value Design Value Deliver Value
Opportunities Value

Understand
Customer
Segmentation, Product and
needs and Promotion
Targeting and Pricing Place Strategies
wants through Strategies
Positioning Strategies
Market
Research Marketing Mix
VI. Practice Caselet
 Caselet - 1
Raymond’s Made to Measure
Traditionally, customers would rely on local tailors who
specialize in stitching custom-made dresses for their
clients. However, with increasing preference for readymade Questions :
garments, customer started adjusting to standard size of Q1. What are the consumer ‘needs’ and ‘wants’ that
garments rather than adjusting the garments’ fit to you identify for Raymond’s made-to-measure
variations in individual sizes. services? Also trace the Value Proposition, Offering
and the Brand.
As an alternative, Raymond’s started Made-to-measure
services in the company’s flagship outlets in various Indian Q2. Trace the traditional 4ps for this product. (You
may want to visit a Raymond’s store, or gather more
cities. At its retail points, customers select the fabric they
details on the Internet to answer this question).
like and the measurements are taken. This data is
transmitted to a central manufacturing location where the Q3. What are the pros, cons, and risks associated
garment is stitched according to the specifications. The with Raymond’s marketing strategy for offering
custom-made garments reach the shop on pre-specified made-to-measure services?
dates. The advantage of this service offer is that the
garments have the finish of readymade garments, but are
made to suit individual measures.
Caselet - 1
Raymond’s Made to Measure

Questions :
Q1. What are the ‘needs’ and ‘wants’ that you identify for Raymond’s made-to-measure
services? Also trace the Value Proposition, Offering and the Brand.

Q2. Trace the traditional 4ps for this product. (You may want to visit a Raymond’s store, or
gather more details on the Internet to answer this question).

Q3. What are the pros, cons, and risks associated with Raymond’s marketing strategy for
offering made-to-measure services?
End of Module 1