MARKETING MANAGEMENT

MARKETING
Marketing is a social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. It is a behavioral science dealing with needs and wants of the target market.

BASIC TERMS IN MARKETING

NEEDS: A state of felt deprivation WANTS: The form assumed by a human need as shaped by economic status, culture and personality DEMANDS: Human wants backed by buying power, ie, I have money to buy a Coca-Cola

PRODUCT

Anything that can be offered to a market for attention acquisition, use or consumption that might satisfy a need or a want.
VALUE

The difference between the benefits that the consumer gains from owing and using a product and the cost of obtaining it. Value = B ------C
SATISFACTION

The extent to which a products perceived performance matches buyers expectations.

The Marketing Process DemographicEconomic Environment

Marketing Intermediaries

TechnologicalNatural Environment

Product Suppliers Target Place Consumers Price

Promotion

Publics

PoliticalLegal Environment

Competitors

SocialCultural Environment

MACRO & MICRO MARKETING

Macro Marketing A social process that directs an economys flow of goods and services to efficiently match supply and demand to meet the societys objectives.

Micro Marketing
Performance of activities that seeks to accomplish an organizations objectives by anticipating consumer needs and directing the flow of goods and services.

UTILITIES CREATED BY MARKETING

Time Utility Place Utility Possession Utility

CONCEPTS OF MARKETING
Production Concept Consumers favour products that are available and highly affordable. Product Concept Consumers favour products that offer the most quality, performance, and innovative features.

 Selling concept Consumers will buy products only if the company promotes/sells these products. Marketing concept Focuses on needs/wants of target markets and delivering satisfaction better than competitors.

Social Marketing Concept Focuses on needs/wants of target markets and delivering superior value to society's well being

Growing challenges to marketing

Rapid globalisation Growth of information technology Integration of world economy Service sector boom Growth of non-profit organization Growing competition

Essentials of marketing success

Understand your customer well Understand your competitor well Understand your environment well Understand your break even level Understand your strength and weakness Stress on market development Delight the customer through distinctiveness.

Provide value to the customer Segment, target & position your product. Consider marketing as a cross functional activity.

Macro environment of marketing

DEMOGRAPHIC AND SOCIAL ENVIRONMENT Rate of growth of population Sex ratio Age composition Religions and caste composition

Geographical distribution Rural urban migration Education Pattern of house holdssingle/separated/widowed family Nature of family setup- joint/single Size of family Role of women in family Thrift habits

ECONOMIC ENVIRONMENT
Increasing economic integration between nations ( It was 10 % at the beginning of the last century. Now it is 60%) Increased movement of capital movement across the nations as compared to trade movement. The struggle between communism and capitalism is over. World economy has emerged as a single unit and individual nations only plays a subordinate role.

 World economy is growing at 1.5 to 2.5 %rate.

Increasing economic freedom all over the world. The relationship between employment and productivity concept has changed/ Emergence of a new international currency in place of dollar. High degree of inequality of income and wealth distribution ( 21 % of the population holding 81 % of worlds wealth. NAFTA 7 % of the population 30% wealth, Japan and Tigers 5%population holding 21 % of the wealth,EU 7% population holding 30% wealth .China 235 population 5%wealth.India 17% of population ,and 1%of wealth) Development of BEM.

BIG EMERGING MARKETS52% of world population,15% of worlds wealth and 29% of world purchasing power
CHINA,TAIWAN AND HONG JONG BRAZIL KOREA INDIA MEXICO RUSSIAN FEDERATION ARGENTINA TURKEY SOUTH AFRICA INDONESIA POLAND

TRADE ENVIRONMENT
FORMS OF TRADE COOPERATIONS FREE TRADE AREA CUSTOMS UNION COMMON MARKET ECONOMIC UNION

TRADE COOPERATION BETWEEN NATIONS

1. NORTH AMERICAN FREE TRADE AREA ( NAFTA ) STARTED IN 1994 US CANADA MEXICO

2. CENTRAL AMERICAN
INTEGRATION SYSTEM
FORM OF COOPERATION- COMMON MARKET HONDURAS GUATEMALA EL SALVADOR NICARAGUA COSTARICA PANAMA

3. ANDIAN COMMUNITY-1969

FORM OF COOPERATION FREE TRADE AREA BOLIVIA COLOMBIA ECUADOR PERU VENEZUELA

4. MERCOSURE-1991
FORM OF COOPERATION COMMON MARKET ARGENTINA BRAZIL PARAGUAY URUGUAY CHILI

5.CARIBBEAN COMMUNITY AND

COMMON MARKET-1973
FORM OF COOPERATION COMMON MARKET ANTIGUA BARBUDA BAHAMAS BARBADOS JAMAICA

6.EUROPIAN UNION
1958 BELGIUM FRANCE HOLLAND ITALLY LUXEMBOURG WEST GERMANY 1973 BRITAIN DENMARK IRELAND1981 GREECE

1986 SPAIN PORTUGAL 1995 FINLAND SWEEDEN AUSTRIA

7.ASSOCIATION OF SOUTH EAST ASIAN

NATIONS-1967
BRUNEI COMBODIA INDONESIA LAOS MALAYSIA MYANMAR PHILIPPINES SINGAPORE THAILAND VIETNAM

8.GULF COOPERATION COUNCIL-1981 AND ARAB COOPERATION COUNCIL

8. GULF COOPERATION COUNCIL1981 BAHRAIN KUWAIT OMAN QUATAR SAUDI ARABIA UAE

9.ARAB COOPERATION COUNCIL EGYPT IRAQ JORDAN NORTH YEMEN

SOCIAL AND CULTURAL ENVIRONMENT

What is culture? Culture is defined as the pattern of living of a group of people shaped by values, attitudes, beliefs and social institutions that are transmitted from one generation to other Material culture: Physical aspect of culture Non material culture: Beliefs attitudes and value system Belief: An organized pattern of knowledge that an individual holds to be true about the world. Eg. Belief that hard work is the secret of success, IBM is a good computer. Attitude: Learned tendency to respond in a consistent way to a given object. Eg. Attitude of working hard. Cognitive component of attitude: Belief about something. Affective component: Feelings and emotions. Eg. Cock is fun Core culture and sub culture

COMPONENTS OF CULTURE
Aesthetics-Views about beauty Colour Music Dietary preferences Language Dressing Religious customs Role of men and women in the society Social institutions Time orientation- Mono chronic Vs Poly chronic Etiquette Attitude towards society

Hofstedes Cultural Topology

Power distance: The extent to which less powerful members of the society accept power to be distributed unequally.
Individualism: The degree to which individuals in a society are integrated in to a group.

Masculinity: The degree to which men are expected to be more assertive and competitive.
Uncertainty avoidance: The degree to which the members of the society are uncomfortable with unclear ambiguous situations. Time orientation: The degree to which people are concerned with long term well being as compared to short term aims.

JAPANEES CULTURE RELATING TO

BUYING BEHAVIOR

Emphasis on emotional values Prefer bargain outlets Do things in a small unnoticed way Collective oriented Family relationship is strong Male domination is less Status oriented Consider more importance to corporate identity More serious Cooperative

AMERCIAN CULTURE AND BUYING BEHAVIOR

Performance oriented Do things in a big way Individualistic Family relationship is weak Competitive Youth oriented Environment oriented High value to personal hygiene Male domination is more

CHINESE BUYING BEHAVIOR

Consumption is a pleasure Higher shopping comparison High regards to western products Packaging is very important Reluctance to pioneer Spend major share of income for consumption Referral is more powerful Need factual information than life style image Official media is more trusted Not interested in free gifts Nationalistic based promotion is more effective Multifunctional products are welcome

Natural Environment
More Government Intervention

Higher Pollution Levels

Factors Affecting the Natural Environment

Shortages of Raw Material

Increased Costs of Energy

Technological Environment
Rapid Pace of Change High R & D Budgets

Issues in the Technological Environment

Focus on Minor Improvements

Increased Regulation

Political Environment

Increased Legislation

Key Trends in the Political Environment

Greater Concern for Ethics

Changing Enforcement

LEGAL ENVIRONMENT
The Indian Contract Act. The Indian Partnership Act. The Indian sale of Goods Act. The weight and measures Act. The packaged commodity Act. The Income Tax Act. The value added Tax Act.

The Customs duty Act The Central Excise Act. The Food Adulteration Act. The restrictive trade practice Act The Indian companies Act.

LEGAL SYSTEM
COMMON LAW SYSTEM (UK, USA, Canada, India etc.) Civil law system Roman law( Japan, Korea, China) Islamic law system

BUSINESS ISSUES IN LEGAL SYSTEM

Jurisdiction of the applicability of law Intellectual property Anti trust law Licensing and trade secret Corruption and bribery Forms of bribery: Simple bribery--ExtortionLubricationSubornation Service payments

CHANGING STRUCTURE OF MARKETING

Marketing of last decade Maximize the market share and revenue was the objective Marketing of present decade Maximize customer value is the objective

Quality standards were Quality standards were determined internally determined by customers.

Products and services had separate entities

Products are enveloped by services

Only marketing people Everyone in the were concerned with company is concerned customers with customers Marketing management Marketing is managed was unstructured be a cross functional team.

Products were developed to enter new markets

Brands were built to have differentiated association Communications were used to convey brand association

To meet customer needs

To provide distinctive value To create expectation of value.

Delivery systems were To reinforce value used to make purchase proposition easy Relationships were less important than values
Marketing research was used for large scale segmentation The company sold what it manufactured

Relationship is built to offer life time value.

Used to understand customer needs. Company manufacture what customer want.

Cost determined the price

Value to customer determine the price

Distribution focused on Focused to enhance reach and penetration shopping experience Not aware of event marketing Event marketing has become an order of the day Higher value for higher Higher value of lesser price price (super value)

Changing profile of Indian consumers

OLD GENERATION CONSUMERS NEW GENERATION CONSUMERS

Insecure Idealistic Risk Averse Savings oriented Debt shy Job security Long term reward Considered decision Defined role of men & women Future oriented

Confident Pragmatic Risk taking Investment oriented Dept open Job satisfaction Instant gratification Impulsive decision Diffusion of role Present oriented

The Microenvironment
Company

Publics

Forces Affecting a Companys Ability to Serve Customers

Suppliers

Competitors

Intermediaries

Customers

The Companys Microenvironment

Companys Internal Environment- functional areas such as top management, finance, and manufacturing, etc. Suppliers - provide the resources needed to produce goods and services. Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers.

 Customers - five types of markets that purchase a companys goods and services. Competitors - those who serve a target market with similar products and services. Publics - any group that perceives itself having an interest in a companys ability to achieve its objectives.

Customer Markets
International Markets Consumer Markets

Company
Government Markets Reseller Markets Business Markets

Responding to the Marketing Environment

Environmental Management Perspective Taking a proactive approach to managing the microenvironment and the macro environment to affect changes that are favorable for the company. How? Hire lobbyists , run advertorials, file law suits and complaints, and form agreements.

CONSUMER BEHAVIOUR- Definition

It is the study of individuals, groups, or organizations and process they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. In other words this is a study of what consumers buy? When consumers buy? How much quantity consumers buy? With whom consumers go for buying? How much time consumers spend for buying? What factors consumers consider while buying? etc.

Types of buying
Straight rebuy Modified rebuy New task buying

Types of Buying Decisions

High Involvement Significant differences between brands Few differences between brands

Low Involvement

Complex Buying Behavior DissonanceReducing Buying Behavior

VarietySeeking Behavior Habitual Buying Behavior

Buying Centre
All people involved in the buying process are called buying centre. They include -Initiator -Influencer -Decider -Buyer -User

Model of Consumer Behavior

Product Price Place Promotion

Marketing and Other Stimuli

Economic Technological Political Cultural

Buyers Decision Process

Buyers Black Box

Characteristics Affecting Consumer Behavior

Product Choice Brand Choice

Buyers Response

Purchase Timing Purchase Amount

Dealer Choice

Characteristics Affecting Consumer Behavior

Culture
Social Personal Psychological

Buyer

Factors Affecting Consumer Behavior: Culture

Most basic cause of a person's wants and behavior. Values Perceptions
Subculture
Groups of people with shared value systems based on common life experiences. Hispanic Consumers African American Consumers Asian American Consumers Mature Consumers

Social Class
People within a social class tend to exhibit similar buying behavior.
Occupation

Income Education Wealth

Factors Affecting Consumer Behavior: Social

Groups
Membership Reference

Family Husband, wife, kids Influencer, buyer, user

Social Factors

Roles and Status

Types of reference Groups

Primary reference group Secondary reference group Aspiration group Disassociate group Group Influence: Informational influence Normative influence (fulfilling the group expectation) Identification influence

Factors Affecting Consumer Behavior: Personal

Personal Influences
Age and Family Life Cycle Stage
Economic Situation Occupation

Personality & Self-Concept

Lifestyle Identification
Activities Opinions

Interests

Factors Affecting Consumer Behavior: Psychological

Motivation

Beliefs and Attitudes

Psychological Factors

Perception

Learning

Perception
Series of activities involved in the process of procuring, processing and storing of information input. This involves : -Exposure -Attention -Interpretationi. Cognitive Interpretation, ii. Effective Interpretation -Memory

Learning
Learning is any change in the content of long- term and/or behavior. -High involvement learning -Low involvement learning - Classical conditioned learning - Operant conditioned learning (Instrumental learning) -Vicarious learning (Experienced learning)

Motivation
An unobservable inner force that stimulates and compels a behavioral response and provided specific direction to that response.

Maslows Hierarchy of Needs

Self Actualization
(Self-development)

Esteem Needs (self-esteem, status) Social Needs

(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)

Attitude and beliefs

Attitude: It is an enduring organization of motivational, emotional, perceptual, and cognitive processes with respect to some aspect of our environment Cognitive component- belief Affective component- emotions and feelings Behavioral component- action tendencies

Self- Concept
It is defined as the totality of the individuals thoughts and feelings having reference to him-or herself as an object.
Actual self- concept : perception of what I am? Ideal self- concept: perception of what I would like to be.? Social self-concept: perception of what I would like to be seen by others? Private self concept: perception of what I would like to be seen by myself?

Personality traits Cattells Personality model

-Reserved Vs Outspoken -Emotionally stable Vs Emotionally weak -Humble Vs Assertive -Practical Vs Imaginative -Conservative Vs Modern -Group dependent Vs Self Sufficient -Relaxed Vs Tensed -Tough minded Vs Tender minded -Self assured Vs Insecure -Controlled Vs Undisciplined -Shy Vs Socially bold -Serious Vs Easy going

The Buyer Decision Process

Need Recognition Information Search

Evaluation of Alternatives
Purchase Decision Postpurchase Behavior

The Buyer Decision Process

Step 1. Need Recognition
Need Recognition
Difference between an actual state and a desired state

Internal Stimuli Hunger

Thirst

External Stimuli
TV advertising

Magazine ad

A persons normal needs

Radio slogan
Stimuli in the environment

The Buyer Decision Process

Step 2. Information Search
Personal Sources Commercial Sources
Family, friends, neighbors Most influential source of information Advertising, salespeople Receives most information from these sources Mass Media Consumer-rating groups Handling the product Examining the product Using the product

Public Sources

Experiential Sources

The Buyer Decision Process

Step 3. Evaluation of Alternatives
Product Attributes
Evaluation of Quality, Price, & Features

Degree of Importance
Which attributes matter most to me?

Brand Beliefs
What do I believe about each available brand? Based on what Im looking for, how satisfied would I be with each product?

Total Product Satisfaction

Evaluation Procedures
Choosing a product (and brand) based on one or more attributes.

The Buyer Decision Process

Step 4. Purchase Decision
Purchase Intention Desire to buy the most preferred brand

Attitudes of others

Unexpected situational factors

Purchase Decision

The Buyer Decision Process

Step 5. Post purchase Behavior
Consumers Expectations of Products Performance Products Perceived Performance

Satisfied Customer!

Dissatisfied Customer

Cognitive Dissonance

Stages in the Adoption Process

Awareness Interest

Evaluation
Trial Adoption

Adoption of Innovations
Percentage of Adopters

Early Majority Innovators

Late Majority

Early Adopters
13.5%

34%

34%

Laggards

16%

2.5%

Time of Adoption

Early

Late

Influences on the Rate of Adoption of New Products

Communicability
Can results be easily observed or described to others?

Relative Advantage
Is the innovation superior to existing products?

Divisibility
Can the innovation be used on a trial basis?

Product Characteristics

Compatibility
Does the innovation fit the values and experience of the target market?

Complexity
Is the innovation difficult to understand or use?