You are on page 1of 91

Welcome To Marketing Management

Chapter 1
Understanding Marketing Management
What is Marketing
What is Marketing Management
Marketing Myths & Realities:
Marketers Responsibilities
 Creating Customer Value
Customer value is the amount of benefits which customers get from purchasing products and
services. It can also be defined as the difference between the values customer gains from using a product and cost of the
product. Customers evaluate the trade-off between the benefits they are acquiring and the price they
are paying for those benefits. Customer value can be shown as an equation as below:
CustomerValue = Total Customer Benefits – Total Customer Costs
Customer value is high if the customer gains more benefits as compared to the cost of product and services and customer
value is low if the customer gains fewer benefits as compared to the product and services cost.
For Example, customer value of Dell laptops and computers are high in view of its customers. Dell products’ quality,
efficiency, brand, delivery and after sale service are the benefits for buyers and definitely it pays more than cost of the
product and services.
Cont…
 Delivering Customer Satisfaction
Human beings always build some expectation in their mind about person, place, product, services, etc. In marketing,
buyer has expectation with the product which he or she is going to purchase.The buyer’s expectation about product
comes from marketing, word of mouth or brand reputation.
Buyer will be satisfied if the product meets or exceed expectations. Buyer will be dissatisfied if
the product does not meet the expectation which buyer had set in his mind before buying it.

Difference Between Seller and


Marketer
 Selling: Short Term Objectives
 Marketing: Long Term Objectives
Difference Between Customer
Value & Customer Satisfaction
Cont…
World of Marketing Management:
Its Applications in Contemporary Settings

The process of analyzing, planning, implementing and


controlling programs designed to create, build and
maintain beneficial exchanges with the target Market in
order to solve their problems and give them satisfaction
for achieving organizations financial and commercial
objectives.
Cont…
Cont…
Satisfaction

 Balance between Expected Performance, Actual Performance

Commercial & Financial Objectives

 Increase Sales / Higher Revenues


 Increase Shares in the Growth of the Industry / Breakeven
points OR Average Profit
 Maximize Market Share / Maximize Profit Margin
What is Marketed
Cont…
 Goods:
Physical goods constitute the major part of a country’s production and marketing effort.
Companies market billions of food products, and millions of cars, refrigerators, television
and machines.
For example: Manufacturers advertise goods to market.
• Services:
Services include the work of airlines, hotels, car rental firms, beauticians, software
programmers, management consultants, and so on. Many market offerings consist of a mix
of goods and services.
For example, a restaurant offers both goods and services.
 Events:
Marketers promote events. Events can be trade shows, company anniversaries,
entertainment award shows, local festivals, health camps, and so on.
For example, global sporting events such as the Olympics or Common Wealth
Games are promoted aggressively to both companies and fans.
Cont…
 Experiences:
Marketers create experiences by offering a mix of both goods and services. A product is
promoted not only by communicating features but also by giving unique and interesting
experiences to customers.
For example, Modern vehicles comes with Bluetooth technology to ensure
connectivity while driving.
 Persons:
Due to a rise in testimonial advertising, celebrity marketing has become a business. All popular
personalities such as film stars, TV artists, and sportspersons are considered as product i.e. person
can be a product.
For example: Celebrities are hired as brand ambassadors for products.
• Places:
Cities, states, regions, and countries compete to attract tourists. Today, states and countries are
also marketing places to factories, companies, new residents, real estate agents, banks and
business associations.
For example: Mega events and exhibitions to market places. The tourism ministry
is also aggressively promoting tourist spots locally and globally.
Cont…
 Properties:
Properties can be categorized as real properties or financial properties. Real property is the
ownership of real estates, whereas financial property relates to stocks and bonds. Properties
are bought and sold through marketing.
For example: Bahria Town open its premises to visit.

 Organizations:
Organizations actively work to build image in the minds of their target public. Marketers
need to build the corporate image, as exchange of services does not result in the ownership
of anything. The organization’s goodwill promotes trust and reliability. The organization’s
image also helps the companies in the smooth introduction of new products.
For example: CSR activities.
Cont…
 Information:
Information can be produced and marketed as a product. Educational institutions,
encyclopedias, non-fiction books, specialized magazines and newspapers market
information. The production, packaging, and distribution of information is a major industry.
Media revolution and increased literacy levels have widened the scope of information
marketing.
Foe example: New Papers and specialized magazines.

 Idea:
Every market offering includes a basic idea. Products and services are used as platforms for
delivering some idea or benefit. Social marketers widely promote ideas.
For example: Vehicle manufacturers promotes safe driving habits, need to wear
seat belts, need to prohibit children from sitting near the driver’s seat, and so
on.
Key Customer Markets
 Consumer Markets
The consumer market pertains to buyers who purchase goods and services for
consumption rather than resale.
 Business Markets
Marketplaces where organizations purchase raw materials, natural resources and
components of other products for their resale or for use in manufacturing another
product.
 Global Markets
The process of conceptualizing and then conveying a final product or service
worldwide with the hopes of reaching the international marketing community.

For example: KFC, McDonald


 Nonprofit and Governmental Markets
Marketing Tools & Concepts
Physical Market
Purchases made by the market from physical stores.

Digital Market
Purchases made by the market through electronic devices.

Meta Market
When small businesses are surviving because of one large business.
Classification of Needs
Primary Needed Products
Products necessary for persons to be included in a specific social group.

Secondary Needed Products


Products which increase the efficiency of persons but without them they are considered members
of a specific social group.

Tertiary Needed Products


Products which are status symbol but they don't effect efficiency nor are necessary for inclusion in
a specific social group.

Egoistic Needed Products


Products acquired by individuals to create uniqueness in a specific social group
Needs, Wants & Demand
Needs: Kotler and Keller
 Stated needs (The customer wants an inexpensive car.)

 Real needs (The customer wants a car whose operating cost, not
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 GPS navigation system.)

 Secret needs (The customer wants friends to see him or her as a


savvy consumer.)
The New Economy
 Substantial increase in buying power

 A greater variety of goods and services

 A greater amount of information about practically anything

 A greater ease in interacting and placing and receiving orders

 An ability to compare notes on products and services


Demand States
1. Negative demand:
People don’t like to buy product but have to buy. Company has to highlight benefits to increase demand. Example:
Medicines.
2. No demand
People needs product but there is a communication and availability gap. Marketers has to develop awareness about
available product. Example: Alternative goods.
3. Latent demand
Product does not exists currently in demand but it will require in future. Example: Solar energy system.

4. Irregular demand
Fluctuation in demand based on season or seasonal demand .
 Marketers needs to change the frequency of supply.
 Marketers need to give advance incentives.
 Marketers need to give deferred incentives.
Demand States
5. Full demand
Demand equal to Supply. If company doesn’t ensure full demand, people will go to alternate options. Example:
Coke demand increases in absence of Pepsi.
6. Overfull demand
People are willing to wait for products if not available in market.
Example: People take appointment for specific doctor.
7. Decline Demand
Companies start loosing their product image & demand.

8. Unwholesome demand
Society as a whole rejects the product. People rejects drugs, poverty etc.
NGOs put efforts to remove poverty, enhance education etc.
Company Orientations Toward the
Marketplace

 Production Concept (1945 – 1955)


 Basic Needs, Affordable, Available, Mass Production

 Product concept (1956 – 1965)


 Focused the Quality and Durability of Products

 Selling Concept (1966 – 1975)


 Focus on Incentives for Increasing Sales
 Inside-Out Approach
Cont…
 Marketing Concept (1976 – 1985)
 Focused on Brand Personification/Identity
 Outside-In Approach

 Societal Marketing Concept (1986 – 1995)


 Focused on Environmentally Friendly Products

 Customer Concept (1996 – 2005)


 Treating Each Customer as a Complete Market
Chapter 5
Building Customer Satisfaction, Value,
and Retention
Determinants of
Customer
Delivered Value
Customer Delivered Value
Image Value
 Brand Personality, Logo Trademarks, Product Quality
 Customers are Ready to Bear Psychological Cost for Gaining the Image of the Brand

Personnel Value
 The Person’s Behind a Product, Their expertise and efforts
 Customers are willing to Bear Energy Cost in Recognition of the Efforts Exerted by a Person
Cont…
Service Value
 Convenience and Availability of Products for Customers
 Customers are Willing to Bear Time Cost in Exchange of Services that Provide
Convenience

Product Value
 The Actual Material and the Technology used in a Product
 Customers are Willing to Bear Monitory Cost for the actual Product
Cont…

 The Grid Shall Change as the Target Market is change.

 The Importance of Value Item is Decrease Or Increase


Depending upon the Target Market Approach.
Cultivating Customer Relationship
CRM
Personalizing Marketing
Customer Empowerment
Customer Reviews & Recommendations
CustomerComplaints
The High Performance Business
Stakeholders
1. Suppliers
 Individual or Organizations Responsible for Providing Raw
Material
2. Organization
 Employers
 Employees
3. Marketing Intermediaries
 Channel of Distribution
 Indirect Intermediaries
4. Customers
Processes

1. Market Sensing Process


2. New Product Activity or Development Process
3. Market Attracting or Acquiring Process
4. Customer Relationship Management Process
5. Customer Fulfillment Process
Resources

1. Resource which ads value or is the Value


2. A Resource which is Seasonal or Rare
3. A Resource which Require Time to Develop
4. A Resource which needs to be organized
Organizational Culture

 Formal and Informal Structures

 Centralized and Decentralized Structures


 Decentralization Includes:
 Participative
 Bureaucratic
 Democratic
The Generic Value Chain
 Limitations:
 Only is applicable on Goods or tangible products, does not
completely covers services or intangible products.

 Is made of 3 dimensions:
 A) Primary Activities
 B) Supporting Activities
 C) Margins
The Generic Value Chain
Attracting and Retaining Customers
 Five levels of investment in customer relationship
building
 Basic marketing
 Reactive marketing
 Accountable marketing
 Proactive marketing
 Partnership marketing

3-41
Levels of Relationship Marketing

3-42
Chapter 6
Analyzing Consumer Markets
What Influences Consumer Behavior
Psychological Factor:
The human psychology plays a crucial role in designing the consumer’s preferences and
likes or dislikes for a particular product and services. Some of the important psychological
Factors are:
 Motivation
 Perception
 Learning
 Emotions

Social Factor:
The human beings live in a complex social environment wherein they are surrounded by
several people who have different buying behaviors. Since the man is a social animal who
likes to be acceptable by all tries to imitate the behaviors that are socially acceptable. Hence,
the social factors influence the buying behavior of an individual to a
great extent. Some of the social factors are:
 Family
 Reference Groups
 Roles and status
Cultural Factor:
It is believed that an individual learns the set of values, perceptions, behaviors, and
preferences at a very early stage of his childhood from the people especially, the family and the
other key institutions which were around during his developmental stage. Thus, the behavioral
patterns are developed from the culture where he or she is brought up. Several cultural factors
are:
 Culture
 Subculture
 Social Class

Personal Factor:
There are several factors personal to the individuals that influence their buying decisions.
Some of them are:
 Age
 Income
 Occupation
 Lifestyle
Economic Factor:
The last but not the least is the economic factors which have a significant influence on the
buying decision of an individual. These are:
 Personal Income
 Family Income
 Savings
Key Psychological Process
 Motivation
 Perception
This refers to the set of processes we use to make sense of the different stimuli we're
presented with. Our perceptions are based on how we interpret different sensations. The
perceptual process begins with receiving stimuli from the environment and ends with our
interpretation of those stimuli.
Perception is the process by which we select, organize & interpret information Inputs to
create a meaningful picture of object.

 Learning
We act, we learn.
E.g: Customer buy HP laptop computer, if your experience is rewarding, your response will be
positive. Afterward, if customer want to buy printer, he will assume that printer will also good
because customer stimuli.

 Emotions
A brand or product make a consumer feel proud, excited or confident.
Buying Decision Process
Chapter 9
Dealing with the Competition
Competitive Forces
Five Forces Determining Segment
Structural Attractiveness

Threat of:

1. Intense segment
rivalry
2. New entrants
3. Substitute products
4. Buyers’ growing
bargaining power
5. Suppliers’ growing
bargaining
power

9-52
Industrial Concept of Competition

 Industry

 Number of Sellers & Their Degree of Differentiation


 Entry, Mobility and Exit Barriers
 Cost Structures
 Degree of Vertical Integration
 Globalization
Cont….

 Number of Sellers and Degree of Differentiation


 Pure monopoly
 Oligopoly
o Pure oligopoly (consists of a few companies producing essentially the same
product e.g.oil, steel)
o Differentiated oligopoly (consists of a few companies producing products
(autos, cameras) partially differentiated along lines of quality, features,
styling, or services.
 Monopolistic competition (many competitors are able to differentiate their
offers in whole or in part (restaurants, beauty shop).
 Pure competition
Cont….
 Entry, Mobility & Exit Barriers
 Legal
 Capital
 Physical

 Cost Structures: Amount Required to establish the Business before inviting the
first customer
Cont….
 Degree of Vertical Integration
 Movement along Y axis
 Backward Integration
 Forward Integration

 Globalization
 The Minimum Scale of Business to be established in order to test
the feasibility in a given target market
Market Concept of Competition

 Strengths and Weaknesses


 Dominant
 Strong
 Favorable
 Tenable
 Weak
 Nonviable
Cont….
 Dominant
 A Brand that has the power to take independent decision
 A Brand that sets the Standards of the market
 All competitors must follow the trend to survive in the market

 Strong
 Brand that is able to take innovative decisions within the standards of
dominant brand
 Its not mandatory for other competitors to follow their decision
Cont….
 Favorable
 A relatively new brand that shows potential strengths
 The market is attracted towards the Brand due to its potential strength

 Tenable
 Potentially a stable but is not managed properly
 Can become strong if the deficiencies are removed
Cont….
 Weak
 Potentially it is not stable but is managed well
 Can become favorable if potential deficiencies are removed

 Nonviable
 A Brand which is potentially unstable and is not managed properly as well
 It can only survive if it is relaunched in the market with the fresh image
and identity.
Analyzing Competitors
Three Variables to Monitor
When Analyzing Competitors:

 Share of mind
 Share of heart
 Share of market (Leader, Challenger, Follower, Neicher)

 Share of Stomach – new concept


Designing Competitive Strategies

 Market-Leader Strategies
 Growing Markets
 Stable Markets
 Shrinking Markets
Designing Competitive Strategies

 Market-Leader Strategies
 Growing Markets
 Expanding the Total Market
o New Uses
o More Usage
o New Users
- Attracting
- Acquiring
- Convert non-believers into believers
- Social Issues
- Cultural Issues
- Religious Issues
Cont….
 Stable Markets
 Position Defense
 Flank Defense
 Preemptive Defense
 Counteroffensive Defense
 Mobile Defense

 Shrinking Markets
 Contraction Defense
o Planned contraction(Strategic withdrawal)
Attack Strategies
 Frontal Attack: Copy the Marketing Mix of a leader service and
bata, coke and pepsi

 Flank Attack: Identify the weakness of opponent and launch the


attack, 1 element of MM may weak, pricing, positioning etc.
 Encirclement attack: challenger use better MM than leader,
placement better, price better etc
 Bypass Attack: Where companies launch strategies before their
opponents, intelligence and history required to know the track of
competitors. = Toyota and Honda, lux, etc they use to change
strategies timely

 Gorilla attack: if strong opponent, and no weakness found, short


burst surprise attack shift the focus of a leader. It’s a short term
strategy
Designing Competitive Strategies

 Market-Follower Strategies
 Four Broad Strategies:
 Counterfeiter
 Cloner
 Imitator
 Adapter
Cont….

 Market-Nicher Strategies
 Nicher Specialist Roles
 End-user specialist
 Value-added reseller  Product-feature specialist
 Vertical-level specialist  Job-shop specialist
 Customer-size specialist  Quality-price specialist
 Specific-customer specialist  Service specialist
 Geographic specialist  Channel specialist
 Product or product-line specialist
Chapter 11
Positioning and Differentiating the
Market Offering Through
the Product Life Cycle
Developing and Communicating a
Positioning Strategy

How many ideas to promote?

 Unique selling proposition

 Four major positioning errors


1. Underpositioning
2. Overpositioning
3. Confused positioning
4. Doubtful positioning
Principles of Effective Positioning
 Relevance: Positioning of brand must focus on benefits that are
important to people or reflect the character of the product.

 Clarity: Brand should be positioned in such a way that it is easy to


communicate and quick to comprehend.

 Distinctiveness: In current market situation there are reasonably


good number of players vying for a share in the market, forcing them
to compete on the basis of price or promotion.

 Coherence: A brand should speak with one voice through all the
elements of the marketing mix.
Principles of Effective Positioning
 Commitment: Management should be committed to the position
it has adopted. Once a position is adopted, it takes commitment to
see it through.
 Patience: Patience plays an important role in the success of brand
as branding is not a one-day wonder – it takes years to position a
brand in consumers’ mind.
 Courage: Adopting a strong brand position requires courage as it
is much easier to defend an appeal rather than generate sales pitch.
Positioning Strategies

 Leveraging on Existing Brands' Strategy - leverage on the


names of the firm's existing and established brands for extending
the product line or venturing into another product category

 Corporate Brand Positioning Strategy - uses his company


name/identity for brand extensions.
Positioning Strategies

 Product Features and Benefits Positioning Strategy -


Differentiating the brand on the basis of its features and benefits
offered (USP).

 Examples:
 Ariel offers a specific benefit of cleaning even the dirtiest of clothes
because of the micro cleaning system in the product.
 Colgate offers benefits of preventing cavity and fresh breath.
 Maruti Suzuki offers benefits of maximum fuel efficiency and safety
over its competitors.
Price-Quality Positioning Strategy

 The product is positioned in a way that the super quality


of the product justifies its high price (quality).
 Positioning is done by focusing on the affordable/low
price of the product and its superior quality. Consumer
experiences a feel good factor since he's obtaining a
quality product at an economical price (price).
Positioning Strategies

 Competitive Positioning Strategy - Effective offensive


strategy where the marketer seeks to persuade the consumer
that his brand is superior or at par with an established
competitor.
 Example: Fedex
Positioning Strategies
 Product Category Positioning Strategy: Existing product
category is too congested and the new brand is positioned as
belonging to another product category.
 Example – Cadbury Dairy Milk
Positioning Strategies
 User Positioning Strategy: Products can be positioned
according to their user bases (Nesvita)
Differentiation Tools

The BCG
Competitive
Advantage
Matrix
Differentiation Tools
Product Services Personnel Channel Image

Form Ordering Competence Coverage Symbols


ease
Features Delivery Courtesy Expertise Media

Performance Installation Credibility Performance Atmosphere

Conformance Customer Reliability Events


training
Durability Customer Responsiveness
consulting
Chapter 16
Developing Price Strategies and
Programs
Establishing the Final Price

 Steps in Setting Pricing Policy

 Selecting the pricing objective


 Determine demand
 Estimating costs
 Analyzing competitors, costs prices and offers
 Selecting a pricing method
 Selecting the final price
Adapting the Price

 Geographical Pricing
 Price Discounts and Allowances
 Promotional Pricing
 Discriminatory Pricing
 Product-mix Pricing