MARKETING MANAGEMENT

HANDOUT I
Marketing Management: Introduction

Instructor:
Dr. S. Sahney
Vinod Gupta School of Management, IIT Kharagpur.

Source of Slides: 1. Philip Kotler 2. Rajan Saxena 3. Self

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CONTENTS:
I Characteristics Of Current Millennium

II What is Marketing?

III What is Marketed?

IV Core Concepts of Marketing

V What is Marketing Management?

VI What is Marketing Mix?

VII Key Customer Markets

VIII Orientations towards the Marketplace

IX Shifts in Marketing Management

X Marketing Management Tasks

XI How Business And Marketing Are Changing?

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XII Evolving Views of Marketing’s Role in the Company
I Characteristics Of Current Millennium:
a) A Global Society
- Technology has reduced the gap between different societies.
- Emergence of a global society

b) A Global Market: “glocal”—both global and local.

- Emergence of Global Markets
- Customers expect global products and services at local prices.
- Universal phenomenon

c) Basis for Competitive Advantage

- Knowledge and value creation
- CUSTOMER

d) Impact on Marketing:
- Fast business; Customer expectations have increased.
- You should be possible to offer products and services just at the time when
their idea has occurred in the customer's mind.
- New forms of distribution.

e) Impact on Business:
- Product life cycles would be shorter
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- Role of R&D and Innovation has increased.
II What is Marketing?

Marketing is typically seen as the task of creating, promoting ,and

delivering goods and services to consumers and businesses.

Marketing is a social and managerial process by which individuals and

groups obtain what they need and want through creating, offering, and
freely exchanging products and services of value with others.

The American Marketing Association offers the following definition:

“Marketing is the process of planning and executing the conception,
pricing, promotion, and distribution of ideas, goods, and services to
create exchanges that satisfy individual and organizational goals.”

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MARKETING AS A “PROCESS”:
- Marketing involves an exchange transaction between the buyer
and the seller.
- Marketing emphasises on the mutual satisfaction of both—the
buyer and the seller.
- Development of a long-term relationship between them.

MARKETING AS A “MANAGERIAL FUNCTION”:

- Understanding consumer needs
- Environmental scanning and market opportunity analysis
- Development of competitive marketing plan and strategy such
that an organisation is able to satisfy not only the consumer needs but also
achieve its objectives
- Implementation of marketing plan and development of tactical
plans to overcome problems at the market place; and
- Development of control mechanisms.

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III What is Marketed?

Goods

Services
Events & Experiences

Persons
Places & Properties
Organizations
Information
Ideas
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-10 types of entities.

i) Goods:
- Foods and beverages, clothes, cars, TV’s.

ii )Services:
- Airlines, hotels, car rental firms, barbers and beauticians, accountants,
lawyers, management consultants.

iii) Experiences:
- Nicco Park, Esselworld.

iv) Events:
-Time-based events, such as the Olympics, company anniversaries, major
trade shows, sports events, and artistic performances.

v) Persons:
- Celebrity marketing is a major business.

vi) Places:
- Places—cities, states, regions, and whole nations—compete actively to attract
tourists, factories, company headquarters, and new residents. 7
vii) Properties:
- could be rights of ownership of either real property (real estate) or financial
property (stocks and bonds).

viii) Organizations:
- Organizations actively work to build a strong, favorable image in the minds of
their target publics. E.g., Philips puts out ads with a line, “Lets make things
better”.

ix) Information:
- schools and universities produce and distribute at a price to parents, students,
and communities.
Other examples, encyclopedias, software, CD’s.

x) Ideas:
- Every market offering includes a basic idea.
- Social marketers are busy promoting such ideas as “say no to drugs”, “Save
the environment”, “Be Eco-friendly rainforest”, “Exercise daily”, “Avoid fatty
foods.”
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IV Core Concepts of Marketing:

-needs, wants, and demand

-products and services: offerings and brands

-value, cost, and satisfaction

-exchange, transactions, and relationships

-markets

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a) Needs, Wants and Demands:

- A human need is a state of felt deprivation of some basic satisfaction.

- they are the basic human requirements.

-These needs are not created by their society or by marketers; they pre-
exist; primary needs and secondary needs.

- These needs become wants when they are directed to specific objects
that might satisfy the need.

- Wants are desires for specific satisfiers of these deeper needs; Wants
are shaped by one's society.

Demands are wants for specific products that are backed by an ability
and willingness to buy them.

Wants become demand when supported by purchasing power.

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Marketers do not create needs;

Needs preexist marketers.

Marketers, along with other societal factors, influence wants.

Marketers influence demand by making the product appropriate,

attractive, affordable, and easily available to target consumers.

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b) Products and Services: Offerings and brands:

-People satisfy their needs and wants with goods and services.
-The term product is used to cover both.

A product is anything that can be offered to satisfy a need or want.

Products actually comprise a set of benefits they offer to customers to

satisfy their needs; - these may be through a combination of products,
services, information, and experiences.

A brand is an offering from a known source; it leads to the creation of a

brand image.

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c) Value, cost and satisfaction:

The product/offering will be successful if it delivers value and

satisfaction to the target buyer.

The buyer chooses between different offerings on the basis of which is

perceived to deliver the most value.

Value can be seen as primarily a combination of quality, service, and

price (QSP), called the customer value triad. Value increases with
quality and service and decreases with price.

Value proposition: a set of benefits they offer to customers to

satisfy their needs.

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Value is a ratio between what the customer gets and what he
gives.

The marketer can increase the value of the customer offering in

several ways:
· Raise benefits
· Reduce costs
· Raise benefits and reduce costs
· Raise benefits by more than the raise in costs
· Lower benefits by less than the reduction in costs.

- Satisfaction reflects a person’s judgment of a product’s

perceived performance

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d) Exchange, transactions and relationships:
- Marketing emerges when people decide to satisfy needs and wants
through exchange.

- the act of obtaining a desired product from someone by offering

something in return.

For exchange to take place, five conditions must be satisfied:

1. There are at least two parties.

2. Each party has something that might be of value to the other party.

3. Each party is capable of communication and delivery

4. Each party is free to accept or reject the exchange offer.

5. Each party believes it is appropriate or desirable to deal with the other

party.

If these conditions exist, there is a potential for exchange.

Exchange is a value-creating process because it normally leaves
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both parties better off than before the exchange.
Relationship marketing has the aim of building mutually
satisfying long-term relations with key parties—customers,
suppliers, distributors—in order to earn and retain their
business.

The ultimate outcome of relationship marketing is the building

of a unique company asset called a marketing network.

A marketing network consists of the company and its

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

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e) Markets:

Originally the term market stood for the place where buyers and sellers
gathered to exchange their goods.

Economists use the term market to refer to a collection of buyers and

sellers who transact over a particular product or product class.

Marketers, however, see the sellers as constituting the industry and

the buyers as constituting the market.

A market consists of all the potential customers sharing a particular need

or want who might be willing and able to engage in exchange to satisfy
that need or want.

Thus the size of the market depends upon the number of persons who
exhibit the need, have resources that interest others, and are willing to
offer these resources in exchange for what they want. 17
Markets, Market Place, Virtual & Meta Markets:

Market is a set of existing & potential buyers for a defined product or

service.
Limits of the market are often defined by geography and is invariably
time specific.

Market place is a place where one goes for shopping; it is physical.

The market space (virtual market) is digital in nature.

Meta markets: The convergence of suppliers of all complementary

products and services that are closely related to a product in
consumers mind.
For example, when a consumer buys a house, he needs finance,
furnishings, household goods, interior designing,a construction firm
and a dealer. When all come together, a meta market is created.

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V What is Marketing Management?

Marketing management is the art and science of choosing target

markets and getting, keeping, and growing customers through
creating, delivering, and communicating superior customer value.

According to the American Marketing Association:

Marketing (management) is the process of planning and executing the
conception, pricing, promotion, and distribution of goods, services, and
ideas to create exchanges with target groups that satisfy customer and
organizational objectives.

The Marketing Process:

-consists of analyzing marketing opportunities, researching and
selecting target markets, designing marketing strategies, planning
marketing programs, and organizing, implementing, and
controlling the marketing effort.
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VI What is Marketing Mix?

The marketing mix is the set of marketing tools the firm uses to
pursue its marketing objectives in the target market.

McCarthy has classified these tools into four broad groups; he has
termed them as Ps of marketing: product, price, place, and
promotion.

The marketing program consists of numerous decisions on the mix

of marketing tools to use.

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THE FOUR P’S

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 MARKETING MIX VARIABLES

Goods, services, or ideas that satisfy

Product customer needs

The ready, convenient, and timely

Distribution availability of products

Activities that inform customers about

Promotion the organization and its products

Decisions and actions that establish

Pricing pricing objectives and policies and set
product prices
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 ELEMENTS ADDED TO THE
MARKETING MIX VARIABLES

Receptionist, salesperson, nurse,

People doctor, technician

Partners KLM and Northwest

By the customers before designing the

Participation product

Passion something more than the product

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Robert Lauterborn suggested that the 4Ps correspond to the
customers' 4Cs:

4 Ps 4 Cs

Product Customer needs and

wants
Price Cost to the customer

Place Convenience

Promotion Communication

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VII Key Customer Markets:

1. Consumer Markets: Consumer goods and services. B2C

2. Business Markets: Companies selling business goods

and services. B2B

Domestic Markets: Operating within one’s own country.

Global Markets: Companies face challenges and decisions

regarding which countries to enter, how to enter the country, how to
adapt their products/services to the country, and how to price their
products.

Nonprofit and Governmental Markets: Companies selling to

these markets have to price carefully because these organizations
have limited purchasing power.

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 The marketplace isn’t what it used to be….

• Changing technology • Customer Empowerment

• Globalization • Customization
• Deregulation • Industry Convergence
• Privatization • Heightened competition.

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VIII Orientations towards the Marketplace:

The competing concepts under which organizations have

conducted marketing activities include:

-production concept

-product concept

-selling concept

-marketing concept

-customer concept

-societal marketing concept

-holistic marketing concept

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The first three are of limited use today.
1. Production Concept:

- One of the oldest concepts in business

- Consumers will prefer products that are widely available and

inexpensive.

- Managers of production-oriented organizations concentrate on

achieving high production efficiency and wide distribution coverage;
high production efficiency, low costs, and mass-distribution.

- This orientation makes sense in developing countries, where

consumers are more interested in obtaining the product than in its
features.

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2. Product Concept:

- Consumers will favor those products that offer the most quality,
performance, or innovative features.

-Managers in these product-oriented organizations focus their

energy on making superior products and improving them over time.

-The product concept leads to "marketing myopia," a focus on the

product rather than on the customer's need.

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3. The Selling concept:

- Consumers and businesses, if left alone, will ordinarily not buy enough
of the organization’s products; buying inertia or resistance.

- Therefore, the organization must undertake aggressive selling and

promotion effort.

- Their aim is to sell what they make rather than what the market
wants.

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4. The Marketing concept:

- The marketing concept holds that the key to achieving organizational

goals consists in determining the needs and wants of target markets
and delivering the desired satisfactions more effectively and efficiently
than competitors.

- The marketing concept emerged in the mid-1950s and challenged

the preceding concepts.

- Instead of a product-centered, "make-and-sell" philosophy, there

was a shift to a customer-centered philosophy.

- The job is not to find the right customers for your product, but the
right products for your customers.

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Contrast between the Selling and Marketing Concepts:

Theodore Levitt drew a perceptive contrast between the selling and

marketing concepts

1. Selling focuses on the needs of the seller;

Marketing on the needs of the buyer.

2. Selling is preoccupied with the seller's need to convert his

product into cash;
Marketing with the idea of satisfying the needs of the customer
by means of the product and the whole cluster of things associated with
creating, delivering and finally consuming it.

3. The selling concept takes an inside-out perspective. It starts

with the factory, focuses on existing products, and calls for heavy
selling and promoting to produce profitable sales.
The marketing concept takes an outside-in perspective. It starts
with a well-defined market, focuses on customer needs, coordinates all
the activities that will affect customers, and produces profits by
satisfying customers. 33
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5. The Customer Concept:

Today many companies are moving beyond the marketing concept

to the customer concept.

- a growing number of today's companies are now shaping

separate offers, services, and messages to individual customers;
CUSTOMIZATION.

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 The Customer Concept

Starting
Focus Means End
point

One-to-
one
Customer marketing Profitable growth
Individual needs through capturing
customer and integration customer
values and lifetime value
value
chain

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Contrast between the Marketing and Customer Concepts:

Marketing Concept: works at the level of customer segments

Customer Concept: works at the level of individual customers

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6. The Societal Marketing Concept:

- The societal marketing concept holds that the organization's task

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

- The societal marketing concept calls upon marketers to build

social and ethical considerations into their marketing practices.

- They must balance and juggle the often conflicting criteria of

company profits, consumer want satisfaction, and public interest.

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7 Holistic marketing concept:

The holistic marketing concept is based on the development,

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

Holistic marketing recognizes that “everything matters” with

marketing and that a broad, integrated perspective is often
necessary.

Four components of holistic marketing are:

- relationship marketing
- integrated marketing
- internal marketing
- social marketing.

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a) Relationship marketing has the aim of building mutually
satisfying long-term relationships with key parties—customers,
suppliers, distributors, and other marketing partners.

The ultimate outcome of relationship marketing is the building of a unique

company asset called a marketing network.

A marketing network consists of the company and its supporting

stakeholders (customers, suppliers, distributors, retailers, ad
agencies, university scientists, and others) with whom it has built
mutually profitable business relationships.

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b) Integrated Marketing:
-The marketer’s task is to devise marketing activities and assemble
fully integrated marketing programs to create, communicate, and
deliver value for consumers.

Two key themes of integrated marketing are:

-Many different marketing activities are employed to communicate and
deliver value.
-All marketing activities are coordinated to maximize their joint efforts.

c) Internal Marketing
Holistic marketing incorporates internal marketing, ensuring that
everyone in the organization embraces appropriate marketing principles.

Internal marketing must take place on two levels:

- At one level, the various marketing functions (sales force, advertising,
customer services, product management, and marketing research) must
work together.

- Secondly, marketing must be embraced by the other departments— they

must “think customer.” 42
IV Social Responsible Marketing:

- Holistic marketing incorporates social responsibility marketing

and understanding broader concerns, and the ethical,
environmental, legal, and social context of marketing activities and
programs.

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IX Shifts in Marketing Management:

- From marketing does the marketing to everyone does the marketing.

- From organization by products units to organizing by customer

segments.

- From making everything to buying more goods and services from

outside.

- From using many suppliers to working with fewer suppliers in a

“partnership.”

- From relying on old market positions to uncovering new ones.

From emphasizing tangible assets to emphasizing intangible assets.

- From building brands through advertising to building brands through

performance and integrated communications.

- From attracting customers through stores and salespeople to making

products available online.
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- From selling to everyone to trying to be the best firm serving a
well-defined target market.

- From focusing on profitable transactions to focusing on customer

lifetime value.

- From a focus on gaining market share to a focus on building

customer share.

- From being local to being “glocal”—both global and local.

- From focusing on the financial scorecard to focusing on the

marketing scorecard.

- From focusing on shareholders to focusing on stakeholders.

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X Marketing Management Tasks:

-Developing marketing strategies

-Capturing marketing insights

-Connecting with customers

-Building strong brands

-Shaping market offerings

-Delivering value

-Communicating value

-Creating long-term growth 46

Planning:
-Assessing environmental opportunities and resources
-Determining marketing objectives
-Developing a marketing strategy and plans for implementation and
control
-How, when and by whom are marketing activities performed?

Organizing:
-Developing the internal structure of the marketing unit
-Functions, products, regions, customer types

Implementation
-Coordinating marketing activities
-Motivating marketing personnel
-Developing effective internal communications within the unit

Control
-Establishing performance standards
-Comparing actual performance to established standards
-Reducing the difference between desired and actual performance47
XI How Business And Marketing Are Changing?

The marketplace is changing radically as a result of major

societal forces such as technological advances,
globalization, and deregulation.

Companies are adjusting their marketing practices to meet

new conditions.

Two newer practices that companies and their, marketers are

getting involved in are E-business and customer relationship
management.

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a) How marketing practices are changing: e-business:

E-business describes the use of electronic means and platforms to

conduct a company's Business.

The advent of the Internet has greatly increased the ability of companies
to conduct their business faster, more accurately, over a wider range of
time and space, at reduced cost, and with the ability to customize and
personalize customer offerings.

Countless companies have set up Web sites to inform and promote their
products and services.

They have created Intranets to facilitate employees communicating with

one another and to facilitate downloading and uploading information to
and from the company's computers.

Companies have also set up Extranets with major suppliers and

distributors to facilitate information exchange, orders, transactions, and
payments.
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E-commerce is more specific than e-business; it means that in addition
to providing information to visitors about the company, its history, policies,
products, and job opportunities, the company or site offers to transact or
facilitate the selling of products and services online.

E-commerce has given rise in turn to e-purchasing and e-marketing.

E-purchasing means companies decide to purchase goods, services,

and information from various online suppliers.

E-marketing describes company efforts to inform, communicate,

promote, and sell its products and services over the Internet.

E-business and e-commerce take place over four major Internet domains:
B2C (business to consumer), B2B (business to business), C2C
(consumers to consumers), and C2B (consumers to businesses).

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b) How marketing practices are changing: Customer Relationship
Marketing:

In addition to e-marketing, companies are becoming more skillful in

customer relationship marketing and database marketing.

Customer relationship marketing (CRM)| enables companies to provide

excellent real-time customer service by developing a relationship with
each valued customer through the effective use of individual account
information.

Customer relationship marketing holds that a major driver of company

profitability is the aggregate value of the company's customer base.

In order to know the customer, the company must collect information and
store it in a customer database and do database marketing.
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A customer database is an organized collection of comprehensive
information about individual customers or prospects that is current,
accessible, and actionable for such marketing purposes as lead
generation, lead qualification, sale of a product or service, or
maintenance of customer relationships.

Database marketing is the process of building, maintaining, and using

customer databases and other databases (products, suppliers, resellers)
for the purpose of contacting, transacting, and building relationships.

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XII Evolving Views of Marketing’s Role in the Company:

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