Marketing Management

Amit Sharma

Fundamental Marketing Concepts
• A market-focused, or customer-focused, organization first determines what its potential customers desire, and then builds the product or service. • Marketing theory and practice is justified in the belief that customer use a product or service because they have a need, or because it provides a perceived benefit.

Fundamental Marketing Concepts
• Two major factors of marketing are the recruitment of new customers (acquisition) and the retention and expansion of relationships with existing customers (base management). • Once a marketer has converted the prospective buyer, base management marketing takes over

Fundamental Marketing Concepts
• The process for base management shifts the marketer to building a relationship, nurturing the links, enhancing the benefits that sold the buyer in the first place, and improving the product/service continuously to protect the business from competitive encroachments.

Concepts of Marketing
• "Marketing" is an instructive business domain that serves to inform and educate target markets about the value and competitive advantage of a company and its products. • “Value” is worth derived by the customer from owning and using the product • “Competitive Advantage” is a depiction that the company or its products are each doing something better than their competition in a way that could benefit the customer.

Concepts of Marketing
• Marketing is focused on the task of conveying company and product related information to specific customers. • Multitude of decisions (strategies) are made within the marketing domain on what information to deliver, how much information to deliver, to whom to deliver, how to deliver, when to deliver, and where to deliver. • Once the decisions are made, there are numerous ways (tactics) and processes that could be employed in support of the selected strategies

Range of Marketing
• Identifying and quantifying the need in the marketplace. • Identifying and quantifying the target markets • Identifying the optimum cost effective media – online and offline - to reach the target markets • Reviewing the priorities of the product offering in your overall product mix ‘matrix’

Range of Marketing
• Identifying and developing the most effective distribution channels, be they wholesaler networks, partnering alliances, franchising, or any number of conduits to the market. • Testing different ways of packaging the concepts or products to find their most 'easy-to-sell' form • Testing to find the optimum pricing strategies

Range of Marketing
• Developing effective promotional strategies and effective advertising and supporting collateral, offers, and launch strategies. • Developing and documenting the sales process • Finding the optimum execution of the sales process – through testing of selling scripts, people selection, supporting collateral, skills and attitudinal training, tracking, measuring and refining

Range of Marketing
• Ensuring that sales projections reflect realistic production capacities • Developing nurture programs to optimise the lifetime value of the customer

Two levels of marketing
• Strategic marketing: attempts to determine how an organization competes against its competitors in a market place. In particular, it aims at generating a competitive advantage relative to its competitors. • Operational marketing: executes marketing functions to attract and keep customers and to maximize the value derived for them, as well as to satisfy the customer with prompt services and meeting the customer expectations.

Core Concepts of Marketing
• Needs, Wants & Demands • Needs: Needs are the basic human requirement. • People need food, water, clothing, shelter to survive. • People also have strong need for recreating, education & entertainment.

Core Concepts of Marketing
• Wants: Needs become wants, when they are directed to specific objects that might satisfy the need. • An American needs food but may want a hamburger, French fries, and a soft drink. • A person in Mauritius needs food but may want a mango, rice, lentils, and beans. Wants are shaped by one's society

Core Concepts of Marketing

• Demands : Demands are wants for specific products backed by an ability to pay. Many people want a Mercedes; only a few are willing and able to buy one.

Core Concepts of Marketing
• The distinction between Needs, Wants & Demands helps to understand the frequent criticism that “marketers create needs” or “marketers get people to buy things they don’t want”

Core Concepts of Marketing
• Needs Preexist marketers. • Marketers, along with other societal factors, influence wants. • Marketers might promote an idea (ex. Buying a Mercedes) would satisfy a person’s need for social status but they do not create the need for social status.

Core Concepts of Marketing
• Understanding customer needs and wants is not always simple. • Some customers have needs of which they are not fully conscious, or they cannot articulate these needs, or they use words that require some interpretation. • Consider the customer who says he wants an "inexpensive car.". The marketer must probe further.

Core Concepts of Marketing
• We can distinguish among five types of needs:  Stated needs (the customer wants an inexpensive car).  Real needs (the customer wants a car who operating cost, not its initial price, is low).  Unstated needs (the customer expects good service from the dealer).  Delight needs (the customer would like the dealer to include an onboard navigation system).  Secret needs (the customer wants to be seen by friends as a savvy consumer).

Marketing Mix
• The marketing mix is generally accepted as the use and specification of the four Ps describing the strategic position of a product in the market place. • In the early 1960s, Professor Neil Borden at Harvard Business School identified a number of company performance actions that can influence the consumer decision to purchase goods or services • Borden suggested that all those actions of the company represented a “Marketing Mix”.

Marketing Mix
• Professor E. Jerome McCarthy, also at the Harvard Business School in the early 1960s, suggested that the Marketing Mix contained 4 elements: product, price, place and promotion. • In popular usage, "marketing" is the promotion of products, especially advertising and branding However, in professional usage the term has a wider meaning which recognizes that marketing is customer-centered. • Products are often developed to meet the desires of groups of customers or even, in some cases, for specific customers

Marketing Mix
• E. Jerome McCarthy divided marketing into four general sets of activities. His typology has become so universally recognized that his four activity sets, the Four Ps, have passed into the language.

Marketing Mix

Marketing Mix

Marketing Mix
• Product: The product aspects of marketing deal with the specifications of the actual goods or services, and how it relates to the end-user’s needs and wants. The scope of a product generally includes supporting elements such as warranties, guarantees, and sup

Marketing Mix
• Pricing: This refers to the process of setting a price for a product, including discounts. The price need not be monetary - it can simply be what is exchanged for the product or services, e.g. time, energy, psychology or attention.

Marketing Mix
• Promotion: This includes advertising, sales promotion, publicity, and personal selling, branding and refers to the various methods of promoting the product, brand, or company

Marketing Mix
• Placement (or distribution): refers to how the product gets to the customer; for example, point of sale placement or retailing. This fourth P has also sometimes been called Place, referring to the channel by which a product or services is sold (e.g. online vs. retail), which geographic region or industry, to which segment (young adults, families, business people), etc. also referring to how the environment in which the product is sold in can affect sales.

Marketing Mix
Product Features Optional Services Product quality Place Promotion Price Location Publicity List Price Frequency of Sales Discounts services Promotion
Transportation Personal

Credit Terms

Selling Advertising Mailing List

Style Distribution Brand Name Inventory Packaging Guarantees

Marketing Mix – 7p s
• People: Any person coming into contact with customers can have an impact on overall satisfaction. Whether as part of a supporting service to a product or involved in a total service, people are particularly important because, in the customer's eyes, they are generally inseparable from the total service . As a result of this, they must be appropriately trained, well motivated and the right type of person. Fellow customers are also sometimes referred to under 'people', as they too can affect the customer's service experience, (e.g., at a sporting event).

Marketing Mix – 7p s
• Process: This is the process (es) involved in providing a service and the behaviour of people, which can be crucial to customer satisfaction.

Marketing Mix – 7p s
• Physical evidence: Unlike a product, a service cannot be experienced before it is delivered, which makes it intangible. This, therefore, means that potential customers could perceive greater risk when deciding whether to use a service. To reduce the feeling of risk, thus improving the chance for success, it is often vital to offer potential customers the chance to see what a service would be like. This is done by providing physical evidence, such as case studies, testimonials or demonstrations.

Marketing Mix – Four New Ps
• Personalization: It is here referred customization of products and services through the use of the Internet. Early examples include Dell on-line and Amazon.com , but this concept is further extended with emerging social media and advanced algorithms. Emerging technologies will continue to push this idea forward.

Marketing Mix – Four New Ps
• Participation: This is to allow the customer to participate in what the brand should stand for; what should be the product directions and even which ads to run. This concept is laying the foundation for disruptive change through democratization of information.

Marketing Mix – Four New Ps
• Peer-to-Peer: This refers to customer networks and communities where advocacy happens. The historical problem with marketing is that it is “interruptive” in nature, trying to impose a brand on the customer. This is most apparent in TV advertising. These “passive customer bases” will ultimately be replaced by the “active customer communities”. Brand engagement happens within those conversations. P2P is now being referred as Social Computing and is likely to be the most disruptive force in the future of marketing.

Marketing Mix – Four New Ps
• Predictive modeling: This refers to algorithms that are being successfully applied in marketing problems (both a regression as well as a classification problem).

The Product Life Cycle (PLC)
• The Product Life Cycle (PLC) is based upon the biological life cycle. For example, a seed is planted (introduction); it begins to sprout (growth); it shoots out leaves and puts down roots as it becomes an adult (maturity); after a long period as an adult the plant begins to shrink and die out (decline).

The Product Life Cycle (PLC)
• In theory it's the same for a product. After a period of development it is introduced or launched into the market; it gains more and more customers as it grows; eventually the market stabilises and the product becomes mature; then after a period of time the product is overtaken by development and the introduction of superior competitors, it goes into decline and is eventually withdrawn. However, most products fail in the introduction phase. Others have very cyclical maturity phases where declines see the product promoted to regain customers.

The Product Life Cycle (PLC)

Strategies for the differing stages of the Product Life Cycle
• Introduction The need for immediate profit is not a pressure. The product is promoted to create awareness. If the product has no or few competitors, a skimming price strategy is employed. Limited numbers of product are available in few channels of distribution

Strategies for the differing stages of the Product Life Cycle
• Growth Competitors are attracted into the market with very similar offerings. Products become more profitable and companies form alliances, joint ventures and take each other over. Advertising spend is high and focuses upon building brand. Market share tends to stabilise.

Strategies for the differing stages of the Product Life Cycle
• Maturity Those products that survive the earlier stages tend to spend longest in this phase. Sales grow at a decreasing rate and then stabilise. Producers attempt to differentiate products and brands are key to this. Price wars and intense competition occur. At this point the market reaches saturation. Producers begin to leave the market due to poor margins. Promotion becomes more widespread and use a greater variety of media.

Strategies for the differing stages of the Product Life Cycle
• Decline At this point there is a downturn in the market. For example more innovative products are introduced or consumer tastes have changed. There is intense price-cutting and many more products are withdrawn from the market. Profits can be improved by reducing marketing spend and cost cutting

Strategies for the differing stages of the Product Life Cycle
• Problems with Product Life Cycle In reality very few products follow such a prescriptive cycle. The length of each stage varies enormously The decisions of marketers can change the stage, for example from maturity to decline by price-cutting. Not all products go through each stage. Some go from introduction to decline. It is not easy to tell which stage the product is in. Remember that PLC is like all other tools. Use it to inform your gut feeling.

Place, distribution, channel, or intermediary
• Another element of Neil H.Borden's Marketing Mix is Place. Place is also known as channel, distribution, or intermediary. It is the mechanism through which goods and/or services are moved from the manufacturer/ service provider to the user or consumer

Place, distribution, channel, or intermediary
• There are six basic 'channel' decisions: • Do we use direct or indirect channels? (e.g. 'direct' to a consumer, 'indirect' via a wholesaler) • Single or multiple channels • Cumulative length of the multiple channels • Types of intermediary (see later) • Number of intermediaries at each level (e.g. how many retailers in Southern Spain). • Which companies as intermediaries to avoid 'intrachannel conflict' (i.e. infighting between local distributors)

Place, distribution, channel, or intermediary
• Selection Consideration - how do we decide upon a distributor? • Market segment - the distributor must be familiar with your target consumer and segment. • Changes during the product life cycle - different channels can be exploited at different points in the PLC e.g. Foldaway scooters are now available everywhere. Once they were sold via a few specific stores. • Producer - distributor fit - Is there a match between their polices, strategies, image, and yours? Look for 'synergy'. • Qualification assessment - establish the experience and track record of your intermediary. • How much training and support will your distributor require?

Place, distribution, channel, or intermediary
• Types of Channel Intermediaries. • There are many types of intermediaries such as wholesalers, agents, retailers, the Internet, overseas distributors, direct marketing (from manufacturer to user without an intermediary), and many others. The main modes of distribution will be looked at in more detail.

Place, distribution, channel, or intermediary
• . Channel Intermediaries - Wholesalers • They break down 'bulk' into smaller packages for resale by a retailer. • They buy from producers and resell to retailers. They take ownership or 'title' to goods whereas agents do not (see below). • They provide storage facilities. For example, cheese manufacturers seldom wait for their product to mature. They sell on to a wholesaler that will store it and eventually resell to a retailer. • Wholesalers offer reduce the physical contact cost between the producer and consumer e.g. customer service costs, or sales force costs. • A wholesaler will often take on the some of the marketing responsibilities. Many produce their own brochures and use their own telesales operations

Place, distribution, channel, or intermediary
• Channel Intermediaries - Agents • Agents are mainly used in international markets. • An agent will typically secure an order for a producer and will take a commission. They do not tend to take title to the goods. This means that capital is not tied up in goods. However, a 'stockist agent' will hold consignment stock (i.e. will store the stock, but the title will remain with the producer. This approach is used where goods need to get into a market soon after the order is placed e.g. foodstuffs). • Agents can be very expensive to train. They are difficult to keep control of due to the physical distances involved. They are difficult to motivate.

Place, distribution, channel, or intermediary
• Channel Intermediaries - Retailers • Retailers will have a much stronger personal relationship with the consumer. • The retailer will hold several other brands and products. A consumer will expect to be exposed to many products. • Retailers will often offer credit to the customer e.g. electrical wholesalers, or travel agents. • Products and services are promoted and merchandised by the retailer. • The retailer will give the final selling price to the product. • Retailers often have a strong 'brand' themselves e.g. Ross and Wall-Mart in the USA, and Alisuper, Modelo, and Jumbo in Portugal.

Place, distribution, channel, or intermediary
• Channel Intermediaries - Internet • The Internet has a geographically disperse market. • The main benefit of the Internet is that niche products reach a wider audience e.g. Scottish Salmon direct from an Inverness fishery. • There are low barriers low barriers to entry as set up costs are low. • Use e-commerce technology (for payment, shopping software, etc) • There is a paradigm shift in commerce and consumption which benefits distribution via the Internet

Promotion
• Another one of the 4P's is 'promotion'. This includes all of the tools available to the marketer for 'marketing communication'. As with Neil H.Borden's marketing mix, marketing communications has its own 'promotions mix.' Think of it like a cake mix, the basic ingredients are always the same. However if you vary the amounts of one of the ingredients, the final outcome is different. It is the same with promotions. You can 'integrate' different aspects of the promotions mix to deliver a unique campaign

Promotion
• • • • • • • Personal Selling Sales Promotion Public Relations Direct Mail Trade Fairs and Exhibitions Advertising Sponsorship

Promotion

Promotion
• 1. Personal Selling Personal Selling is an effective way to manage personal customer relationships. The sales person acts on behalf of the organization. They tend to be well trained in the approaches and techniques of personal selling. However sales people are very expensive and should only be used where there is a genuine return on investment. For example salesmen are often used to sell cars or home improvements where the margin is high.

Promotion
• 2. Sales Promotion Sales promotion tend to be thought of as being all promotions apart from advertising, personal selling, and public relations. For example the BOGOF promotion, or Buy One Get One Free. Others include couponing, money-off promotions, competitions, free accessories (such as free blades with a new razor), introductory offers (such as buy digital TV and get free installation), and so on. Each sales promotion should be carefully costed and compared with the next best alternative

Promotion
• 3. Public Relations (PR) Public Relations is defined as 'the deliberate, planned and sustained effort to establish and maintain mutual understanding between an organization and its publics' (Institute of Public Relations). It is relatively cheap, but certainly not cheap. Successful strategies tend to be long-term and plan for all eventualities. All airlines exploit PR; just watch what happens when there is a disaster. The pre-planned PR machine clicks in very quickly with a very effective rehearsed plan.

Promotion
• 4. Direct Mail Direct mail is very highly focussed upon targeting consumers based upon a database. As with all marketing, the potential consumer is 'defined' based upon a series of attributes and similarities. Creative agencies work with marketers to design a highly focussed communication in the form of a mailing. The mail is sent out to the potential consumers and responses are carefully monitored. For example, if you are marketing medical text books, you would use a database of doctors' surgeries as the basis of your mail shot

Promotion
• Trade Fairs and Exhibitions Such approaches are very good for making new contacts and renewing old ones. Companies will seldom sell much at such events. The purpose is to increase awareness and to encourage trial. They offer the opportunity for companies to meet with both the trade and the consumer. Expo has recently finish in Germany with the next one planned for Japan in 2005, despite a recent decline in interest in such events.

Promotion
• Advertising Advertising is a 'paid for' communication. It is used to develop attitudes, create awareness, and transmit information in order to gain a response from the target market. There are many advertising 'media' such as newspapers (local, national, free, trade), magazines and journals, television (local, national, terrestrial, satellite) cinema, outdoor advertising (such as posters, bus sides).

Promotion
• Sponsorship Sponsorship is where an organization pays to be associated with a particular event, cause or image. Companies will sponsor sports events such as the Olympics or Formula One. The attributes of the event are then associated with the sponsoring organization

Pricing Strategies
• There are many ways to price a product. Let's have a look at some of them and try to understand the best policy/strategy in various situations.

Pricing Strategies

Pricing Strategies
• Premium Pricing Use a high price where there is a uniqueness about the product or service. This approach is used where a a substantial competitive advantage exists. Such high prices are charge for luxuries such as Cunard Cruises, Savoy Hotel rooms, and Concorde flights.

Pricing Strategies
• Penetration Pricing The price charged for products and services is set artificially low in order to gain market share. Once this is achieved, the price is increased. This approach was used by France Telecom in order to attract new corporate clients.

Pricing Strategies
• Economy Pricing This is a no frills low price. The cost of marketing and manufacture are kept at a minimum. Supermarkets often have economy brands for soups, spaghetti, etc.

Pricing Strategies
• Price Skimming Charge a high price because you have a substantial competitive advantage. However, the advantage is not sustainable. The high price tends to attract new competitors into the market, and the price inevitably falls due to increased supply. Manufacturers of digital watches used a skimming approach in the 1970s. Once other manufacturers were tempted into the market and the watches were produced at a lower unit cost, other marketing strategies and pricing approaches are implemented.

Pricing Strategies
• Premium pricing, penetration pricing, economy pricing, and price skimming are the four main pricing policies/strategies. They form the bases for the exercise. However there are other important approaches to pricing

Pricing Strategies
• Psychological Pricing This approach is used when the marketer wants the consumer to respond on an emotional, rather than rational basis. For example 'price point perspective' 99 pence not one pound

Pricing Strategies
• Product Line Pricing Where there is a range of product or services the pricing reflect the benefits of parts of the range. For example car washes. Basic wash could be £2, wash and wax £4, and the whole package £6.

Pricing Strategies
• Optional Product Pricing Companies will attempt to increase the amount customer spend once they start to buy. Optional 'extras' increase the overall price of the product or service. For example airlines will charge for optional extras such as guaranteeing a window seat or reserving a row of seats next to each other

Pricing Strategies
• Captive Product Pricing Where products have complements, companies will charge a premium price where the consumer is captured. For example a razor manufacturer will charge a low price and recoup its margin (and more) from the sale of the only design of blades which fit the razor.

Pricing Strategies
• Product Bundle Pricing Here sellers combine several products in the same package. This also serves to move old stock. Videos and CDs are often sold using the bundle approach.

Pricing Strategies
• Promotional Pricing Pricing to promote a product is a very common application. There are many examples of promotional pricing including approaches such as BOGOF (Buy One Get One Free).

Pricing Strategies
• Geographical Pricing Geographical pricing is evident where there are variations in price in different parts of the world. For example rarity value, or where shipping costs increase price.

Pricing Strategies
• Value Pricing This approach is used where external factors such as recession or increased competition force companies to provide 'value' products and services to retain sales e.g. value meals at McDonalds

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