Introduction to Marketing Management

The Importance of Marketing:

 There must be a top line for there to be a bottom line
 Sufficient demand for products and services must be there for companies to make profits.
The Scope of Marketing
 Deals with identifying and meeting human and social needs.
What is Marketing?
 An organizational function and set of processes for creating, communicating, and
delivering value to customers and for managing customer relationships in ways that
benefit the organization and its stakeholders. (American Marketing Association)
Social Definition of Marketing
 A societal 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.
What Marketing is Not!
 Marketing as selling
 Marketing equals advertising
What is Marketing Management?
 The art and science of choosing target markets and getting, keeping, and growing
customers through creating, delivering, and communicating superior customer value.
Exchange and Transactions:
Four Ways to Obtain a Product
 Self-produce
 Use Force
 Beg
 Offer something in return
Exchange is the process of obtaining a desired product from someone by offering something in
return.
Transaction is a trade of values between two or more parties.
Transfer is giving something without anything in return like gifts, charitable contributions.
What is Marketed?
 Goods
  Services
 Events
 Experiences
 Persons
 Places
 Properties
 Organizations
 Information
 Ideas
Who Markets?
Market is a place where buyers and sellers gather to buy and sell goods
Marketer is someone who seeks a response from another party called the prospect
 Consumer markets are companies selling goods and services to individuals and
households
 Business markets are companies selling goods and services to companies
 Global markets are companies selling goods and services in the global marketplace
 Nonprofit and Governmental markets are companies selling their goods to non-profit
organizations such as churches, universities, charitable institutions, and government
agencies.
How Business and Marketing are Changing?
 Changing Technology
 Globalization
 Deregulation
 Privatization
 Customer Empowerment
 Customization
 Heightened Competition
 Industry Convergence
 Retail Transformation
 Disintermediation
Company Orientations Toward the Marketplace
1. The Production Concept
 Holds that consumers will prefer products that are widely available and
inexpensive
 Concentrates on achieving high production efficiency, low costs, and mass
distribution
2. The Product Concept
  Holds that consumers will favor those products that offer the most quality,
performance, or innovative features
 Focus on making superior products and improving them over time.
3. The Selling Concept
 Holds that consumers and businesses will ordinarily not buy enough of the
organization’s products
 Therefore, the organization must undertake an aggressive selling and promotion
effort.
4. The Marketing Concept
 Holds that the key to achieving organizational goals consists of the company
being more effective than competitors in creating, delivering, and
communicating superior customer value to its chosen target market.
5. The Holistic Marketing Concept
 Based on the development, design, and implementation of marketing programs,
processes, and activities that recognizes their breadth and interdependencies
 “The concept of Holistic Marketing says that other functions in the company can
become more efficient if you take the entire perspective”
Holistic Marketing Dimensions
 Relationship Marketing
 Integrated Marketing
 Internal Marketing
 Social Responsibility Marketing
Marketing Mix and the Customer
Four Ps:
 Product
 Price
 Place
 Promotion
Four Cs:
 Customer solution
 Customer cost
 Convenience
 Communication
Fundamental Marketing Concepts, Trends and Tasks
Core Concepts:
 Needs, wants, and demands
  Target markets, positioning, and segmentation
 Offerings and Brands
 Value and Satisfaction
 Marketing channels
 Supply Chain
 Competition
 Marketing environment
 Marketing Planning
Shifts in Marketing Management
1. From Marketing Does the Marketing to Everyone Does the Marketing
2. From Organizing by Product Units to Organizing by Customer Segments
3. From Making Everything to Buying More Goods and Services from Outside
4. From Using Many Suppliers to Working with Fewer Suppliers in a “Partnership”
5. From Relying on Old Market Positions to Uncovering New Ones
6. From Emphasizing Tangible Assets to Emphasizing Intangible Assets
7. From Building Brands through Advertising to Building Brands through Performance and
Integrated Communications
8. From Attracting Customers through Stores and Salespeople to Making Products
Available Online
9. From Selling to Everyone to trying to be the Best Firm Serving Well-Defined Target
Markets
10. From Focusing on Profitable Transactions to Focusing on Customer Lifetime Value
11. From a Focus on Gaining Market Share to a Focus on Building Customer Share
12. From being Local to “Glocal” – both Local and Global
13. From Focusing on the Financial Scorecard to Focusing on the marketing Scorecard
14. From Focusing on Shareholders to Focusing on Stakeholders
Marketing Management Tasks
 Developing Marketing Strategies and Plans
 Capturing Marketing Insights
 Connecting with Customers
 Building Strong Brands
 Shaping the Market Offerings
 Delivering Value
 Communicating Value
 Creating Long-Term Growth
Marketing Planning
1. SWOT
 Originated by Albert S Humphrey in the 1960s.
  Used in a business context, a SWOT Analysis helps you carve a sustainable niche
in your market.
 Strengths and weaknesses are often internal to your organization, while
opportunities and threats generally relate to external factors. For this reason, the
SWOT Analysis is sometimes called Internal-External Analysis.
 Strengths
 Abundant financial resources
 Well-known/Respected brand name/image
 Number rank in the industry
 Economies of scale
 Proprietary technology
 Patented products or processes
 Lower costs (raw materials or processes)
 Superior management talent
 Better marketing skills
 Superior product quality
 Alliances with other firms
 Good distribution skills
 Committed employees
 Weaknesses
 Lack of strategic direction
 Limited financial resources
 Weak spending on R & D
 Very narrow product line
 Limited distribution
 Higher costs (raw materials and processes)
 Out-of-date products/technology
 Internal operating problems
 Internal political problems
 Weak market image
 Poor marketing skills
 Alliances with weak firms
 Limited management skills
 Undertrained employees
 Opportunities
 Rapid market growth
 Complacent rival firms
 Changing customer needs/tastes
 Opening of foreign markets
 Mishap of a rival firm
  New product or process discoveries
 Economic boom/downturn
 Government deregulation
 New Technology
 Demographic shifts
 Other firms seeking alliances
 High brand switching
 Sales decline for substitute product
 Evolving business models in the industry
 Threats
 Entry of foreign competition
 Introduction of new substitute products
 Product life cycle in decline
 Evolving business models in the industry
 Changing customer needs/tastes
 Declining customer confidence
 Rival firms adopting new strategies
Increased government regulation
 Economic boom/downturn
 Change in federal reserve policy
 New technology
 Demographic shifts
 Foreign trade barriers
 Poor performance of ally firm
 International political turmoil
 Weakening currency exchange rates
2. TOWS
 TOWS Analysis is a variant of the classic business tool, SWOT Analysis. TOWS
and SWOT are acronyms for different arrangements of the words Strengths,
Weaknesses, Opportunities and Threats.
 This helps you identify strategic alternatives that address the following additional
questions:
 Strengths and Opportunities (SO) – How can you use your strengths to
take advantage of the opportunities?
 Strengths and Threats (ST) – How can you take advantage of your
strengths to avoid real and potential threats?
 Weaknesses and Opportunities (WO) – How can you use your
opportunities to overcome the weaknesses you are experiencing?
 Weaknesses and Threats (WT) – How can you minimize your weaknesses
and avoid threats?
TOWS Strategic Alternatives Matrix
External Opportunities
(O)
1.
2.
3.
4.
External Threats
(T)
1.
2.
3.
4.
Internal Strengths
(S)
1.
2.
3.
4.
Internal Weaknesses (W)
1.
2.
3.
4.
SO"Maxi-Maxi" Strategy ST"Maxi-Mini" Strategy
Strategies that use strengths to maximize Strategies that use strengths to minimize
opportunities. threats.
WO "Mini-Maxi" Strategy WT"Mini-Mini" Strategy
Strategies that minimize Strategies that minimize
weaknessesby taking weaknesses and avoid threats.
advantage of opportunities.
3. PEST Analysis
 Identifying "Big Picture" Opportunities and Threats
 PEST stands for Political, Economic, Social and Technological factors that affect
business
 Spot’s business or personal opportunities, and it gives you
 advanced warning of significant threats.
 Reveals the direction of change within your business environment. This helps you
shape what you're doing, so that you work with change, rather than against it.
 Helps you avoid starting projects that are likely to fail, for reasons beyond your
control.
 Help you break free of unconscious assumptions when you enter a new country,
region, or market; because it helps you develop an objective view of this new
environment.
 Political Trends
 Have recent elections changed the political landscape within our domestic or
international markets? If so, how?
 What type of industry regulations do elected officials favor?
 What are we doing currently to maintain good relations with elected officials?
Have these activities been effective? Why or why not?
 Legal and Regulatory Issues
 Proposed changes in international, federal, state, or local laws and regulations
have the potential to affect our marketing activities?
 Recent court decisions suggesting we should modify our marketing activities
 What effect will change in global trade agreements or laws have on our
international marketing opportunities?
 Economic Factors to Consider
 What is the unemployment rate? Will it be easy to build a skilled workforce? Or
will it be expensive to hire skilled labor?
 Do consumers and businesses have easy access to credit? If not, how will this
affect your organization?
 How is globalization affecting the economic environment?
 Are there any other economic factors that you should consider?
 How stable is the current economy? Is it growing, stagnating, or declining?
 Are key exchange rates stable, or do they tend to vary significantly?
 Are customers' levels of disposable income rising or falling? How is this likely to
change in the next few years?
 Socio-Cultural Trends
  What is the general attitude of society about our industry, company, and products?
Could we take actions to improve these attitudes?
 What social or ethical issues should we be addressing?
 Demographics and values changing? What effect will these changes have on our
customers, products, pricing, distribution, promotion and our employees?
 What challenges or opportunities have changes in the diversity of our customers
and employees created?
 Technological Factors to Consider
 In which areas do governments and educational institutions focus their research?
Is there anything you can do to take advantage of this?
 How have infrastructure changes affected work patterns (for example, levels of
remote working)?
 Are there existing technological hubs that you could work with or learn from?
 Are there any other technological factors that you should consider?
 Are there any new technologies that you could be using?
 Are there any new technologies on the horizon that could radically affect your
work or your industry?
 Do any of your competitors have access to new technologies that could redefine
their products?
4. INDUSTRY ANALYSIS
Definition and Importance
 Industry analysis is a tool that facilitates a company's understanding of its position
relative to other companies that produce similar products or services.
 Understanding the forces at work in the overall industry is an important
component of effective strategic planning.
Porter’s Model
Five Competitive Forces
 1. Threat of New Entrants- threat of new competition entering the industry
 If this is high the industry attractiveness is diminished
 However, in the early stages of market development new entrants can help a
market expand, bring additional capacity and resources
 Barriers to Entry- factors that would help reduce threat of new entrants
 Economies of scale
 Product differentiation
 Capital requirements
 Switching costs
 Efficient distribution system
2. Bargaining Power of Buyers- the amount of influence buyers (consumer or business)
has on price
 If this is high, it is negatively related to the industry attractiveness
 Bargaining power of buyers is high when:
 Product bought is a large percentage of the buyer’s costs
 Product bought is undifferentiated
 Buyer earns low profits
 Buyer threatens to backward integrate
 Substitutes exist
3. Bargaining Power of Suppliers- the degree of influence suppliers has on price. High
supplier power is not attractive. This is high when:
 There are no substitutes for the product supplied
 Suppliers are highly concentrated
 Supplier has differentiated its product or built switching costs
 Supply is limited
4. Current Category Rivalry- the amount and intensity of competition in a category.
Product categories with intense competition are not attractive. The following are the
characteristics of categories with intense rivalry:
 Many or balance competition
 Slow growth
 High fixed costs
 Lack of product differentiation
 Personal rivalries
5. Pressure from Substitutes- the number of substitutes available in a category. Categories
with larger number of substitutes are lesser attractive than those that deliver unique
products.
Business Implications of Five Competitive Forces

High Threat of New Over capacity, lower prices,

Entrants new competitive paradigm
 High Bargaining Power Lower prices, higher quality,
of Buyers flexible service, encourage
new

High Bargaining Power Higher prices, lower quality,

of Suppliers reduced supply

High Threat from Limited market potential,

Substitutes price ceilings

High-Competitive Lower prices, accelerate new product

intro, distribution & service critical,
Intensity customer loyalty needed

5. MARKET ANALYSIS
Dimensions according to David Aaker
 Market size (current and future)
 Market growth rate
 Market profitability
 Industry cost structure
 Distribution channels
 Market trends
 Key success factors
Market Size
 Actual refers to entire market size, i.e., total market of soft drinks,
 shampoo, etc.
 Estimate can be known through customer survey, published sources
 as government and trade
 Potential untapped market, new use/user
 Small markets
Market Growth
 Market size in the future
 Increasing market means more sales and profit; decreasing means reduced sales and
profit
  Determine market growth by:
1. Identifying driving forces
 What are the forces that drive sales (e.g., price, design, convenience, etc.)?
2. Forecasting Growth
 Market sales indicators demographic data (e.g., number of health
conscious individuals as indicator of nutritional supplements); sales of
related equipment (e.g. presence of call centers is an indicator of 24 hour
convenience stores); based on previous experience of same industries (e.g.
Krispy Kreme and J Co)
3. Detecting Maturity and Decline
 Overcapacity and lack of differentiation
 Buyer Knowledge
 Substitute products or technologies
 Saturation
 No growth sources
 Customer disinterest
4. Growth of submarkets
 Example:
 Coffee market- Nescafe, Kopiko, Maxwell
 Coffee submarket- Starbucks, Figaro
Market Profitability
There are five factors that influence profitability:
 Buyer power
 Supplier power
 Barriers to entry
 Threat of substitute products
 Rivalry among firms in the industry
Industry Cost Structure
 Value chain model useful for determining where value is added and for isolating the
costs.
 The goal of these activities is to offer the customer a level of value that exceeds the cost
of the activities, thereby resulting in a profit margin.
 The primary value chain activities are:
 Inbound Logistics: the receiving and warehousing of raw materials, and their
distribution to manufacturing as they are required.
 Operations: the processes of transforming inputs into finished products and
services.
 Outbound Logistics: the warehousing and distribution of finished goods.
  Marketing & Sales: the identification of customer needs and the generation of
sales.
 Service: the support of customers after the products and services are sold to them.
 The infrastructure of the firm: organizational structure, control systems, company
culture, etc.
 Human resource management: employee recruiting, hiring, training, development,
and compensation.
 Technology development: technologies to support value creating activities.
 Procurement: purchasing inputs such as materials, supplies, and equipment.
 The firm's margin or profit then depends on its effectiveness in performing these
activities efficiently, so that the amount that the customer is willing to pay for the
products exceeds the cost of the activities in the value chain.
 It is in these activities that a firm has the opportunity to generate superior value. A
competitive advantage may be achieved by reconfiguring the value chain to provide
lower cost or better differentiation.
Distribution Systems
 The following aspects of the distribution system are useful in a market analysis:
 Existing distribution channels can be described by how direct they are to the customer.
(see Kantar World Panel Consumer Index)
 Trends and emerging channels new channels can offer the opportunity to develop a
competitive advantage.
 Channel power structure for example, in the case of a product having little brand equity,
retailers have negotiating power over manufacturers and can capture more margin.
 Alternative Distribution Channels
 Direct selling
 Mail orders
 Own retail stores
 Distributors
 Creation of New Channels
 Emerging changes within the distribution channel i.e., home shopping,
convenience stores in gas stations, food cart in MRT/LRT stations, exhibits/sales
expo, online shopping
Market Trends
 Changes in the market are important because they often are the source of new
opportunities and threats
 The relevant trends are industry dependent, but some examples include changes in price
sensitivity, demand for variety, and level of emphasis on service and support.
 Examples: Trivago, Airbnb (hotels); Uber, Grab (transportation)
Key Success Factors
  The key success factors are those elements that are necessary in order for the firm to
achieve its marketing objectives. These are assets and skills that provide the bases for
competing successfully. A few examples of such factors include:
 Access to essential unique resources
 Ability to achieve economies of scale
 Access to distribution channels
 Technological progress
 It is important to consider that key success factors may change over time,
especially as the product progresses through its life cycle.
CUSTOMER ANALYSIS
 Identifying customers’ segments, motivations, and unmet needs.
 Collection and evaluation of data associated with customer needs and market trends
through FGDs, customer satisfaction measurement, field testing, etc.
COMPETITOR ANALYSIS
 Competitor analysis is an assessment of the strengths and weaknesses of current and
potential competitors.
 This analysis provides both an offensive and defensive strategic context to identify
opportunities and threats.
 Profiling coalesces all of the relevant sources of competitor analysis into one framework
in the support of efficient and effective strategy formulation, implementation, monitoring
and adjustment.
 What are their strategies?
 Target market selection
 Core strategy (Positioning)
 Supporting Marketing Mix (Pricing, Promotion, Distribution, Product/Service
Capabilities)
Internal Environment: McKinsey 7S Framework
Internal Environmental Factors
 Events which occur within the organization
 Easier to control than external environmental factors
 Crucial in formulating strategies and plans
7S Model
 Developed in the late 1970s by Tom Peters and Robert Waterman, former consultants at
McKinsey & Company.
 Identified seven internal elements of an organization that need to align for it to be
successful. 
  Can be used on a wide variety of situations where it's useful to examine how the various
parts of your organization work together.
The 7 Elements of the Framework

Hard Elements
 The hard elements (Strategy, Structures, Systems) are easy to identify.
 Management can influence them directly.
 Structures refer to reporting lines and working relationships.
Soft Elements
 On the other hand, the four “soft” elements (Shared Values, Skills, Style, & Staff) are
harder to describe.
 These are less tangible.
 They are mostly influenced by the organizational culture.
 Equally important as the hard elements in ensuring organizational success.
The McKinsey 7S Model
 The model states that the seven elements need to balance and reinforce each other for an
organization to perform well.
 The placement of Shared Values in the center of the model emphasizes that they are
central to the development of all the other critical elements.
The 7 S
 Strategy - organization's plan for building and maintaining a competitive advantage over
its competitors.
 Structure - this is how your company is organized (how departments and teams are
structured, including who reports to whom).
 Systems - the daily activities and procedures that staff use to get the job done.
 Shared Values - these are the core values of the organization and reflect its general work
ethic. They were called "superordinate goals" when the model was first developed.
 Style - the style of leadership adopted by the management.
 Staff – the Human Resource, workforce, the employees, and their general capabilities.
 Skills - the actual skills and competencies of the organization's employees.
Using the McKinsey 7-S Model
 You can use the model to identify which elements of the 7-S' you need to realign to
improve performance, or to maintain alignment and performance during other changes.
These changes could include restructuring, new processes, an organizational merger, new
systems, and a change of leadership.
Application of the McKinsey 7-S Model
1. Start with your shared values: are they consistent with your structure, strategy, and
systems? If not, what needs to change?
2. Then look at the hard elements – your strategy, structure and systems. How well does
each one support the others? Identify where changes need to be made.
3. Next, look at the soft elements – shared values, skills, (leadership) style, and staff. Do
they support the desired hard elements? Do they support one another? If not, what needs
to change?
4. As you adjust and align the elements, you'll need to use an iterative (and often time-
consuming) process of adjusting, and then re-analyzing how that impacts other elements
and their alignment. The result of better performance will be worth it.
Checklist Questions for the McKinsey 7-S Framework
 Strategy:
 What is our strategy?
 How do we intend to achieve our objectives?
 How do we deal with competitive pressure?
 How are changes in customer demands dealt with?
 How is strategy adjusted for environmental issues?
 Structure:
 How is the company/team divided?
 What is the hierarchy?
 How do the various departments coordinate activities?
  How do the team members organize and align themselves?
 Is decision-making centralized or decentralized? Is this as it should be, given what
we're doing?
 Where are the lines of communication? Explicit or implicit?
 Systems:
 What are the main systems that run the organization? Consider financial and HR
systems,
 as well as communications and document storage.
 Where are the controls and how are they monitored and evaluated?
 What internal rules and processes does the team use to keep on track?
 Shared Values:
 What are your organization's core values?
 What is its corporate/team culture like?
 How strong are the values?
 What are the fundamental values that the company/team was built on?
 Style:
 How participative is the management/leadership style?
 How effective is that leadership?
 Do employees/team members tend to be competitive or cooperative?
 Are there real teams functioning within the organization or are they just nominal
groups?
 Staff:
 What positions or specializations are represented within the team?
 What positions need to be filled?
 Are there gaps in required competencies?
 Skills:
 What are the strongest skills represented within the company/team?
 Are there any skills gaps?
 What is the company/team known for doing well?
 Do the current employees/team members have the ability to do the job?
 How are skills monitored and assessed?

Marketing is the process in which it recognizing the customer’s needs and deciding how best to
address or meet their needs. This cycle illuminates the plan and creation regarding items after the
ideas are established. Additionally, marketers set value propositions that guide promotions, and
these selling points often define the product for consumers more than its features.

In contrast, advertising is the exercise of endorsing a company and its products or services through
paid channels. Advertising is any paid form of non-personal presentation and promotion of ideas,
goods, or services by an identified sponsor. In other words, advertising is a component of marketing.