Marketing Management

What do we mean by Marketing?

What is a Market?
Marketing Concepts
•Product Concept
•Selling Concept
•Marketing Concept
•Societal Marketing Concept
Understanding the difference between
Selling and Marketing
Marketing Management Process
Marketing Mix & Extended Mix for
Services
Developing Marketing Orientation
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Definition
Marketing is defined as development and
distribution of goods and services for
chosen consumer segments by which
profitability is achieved with a goal of
customer satisfaction.

The performance of business activities that

direct the flow of goods and services from
producer to consumer or user

Phillip Kotler defines marketing as 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 to each other
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Market -
A market is defined as any one of a variety
of different systems, institutions,
procedures, social relations and
infrastructures whereby persons trade, and
goods and services are exchanged, forming
part of the economy. It is an arrangement
that allows buyers and sellers to exchange
things.

Markets vary in size, range, geographic

scale, location, types and variety of human
communities, as well as the types of goods
and services traded.
Examples: shopping malls, CBD, wholesale
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Marketing Concepts
Production Concept - holds the consumers
will prefer products' that are widely
available and inexpensive. The concept
emerges out of the production orientation of
the firm. It is based on the idea that the
more we make, the more profitable we
become

Product Concept - the proposition that

consumers will favor those products that
offer attributes like quality, performance
and other innovative features. Managers
focus on developing superior products and
improving the existing product lines over a
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Selling Concept – means that
customers, be they individuals or
organizations will not
buy enough of the firm's products
unless they are persuaded to do so
through the selling
effort. So companies should undertake
selling and promotion of their products
for
marketing success
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Marketing Concept – the reason for success
lies in the company's ability to create, deliver and
communicate a better value proposition through its
marketing offer, in comparison to the competitors for its
chosen target segment.

Theodore Levitt - "Selling focuses on the needs of the

seller and marketing focuses on the buyer. Selling is
preoccupied with the
seller's need to convert his product into cash, marketing
deals with the idea of satisfying customer needs by
offering a quality product and the whole cluster of
things associated with creating, delivering and finally
consuming it"
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Societal Marketing Concept – the
enterprise's task is to determine the needs, wants
and intentions of the target market and to deliver
the expected satisfaction more effectively and
efficiently than the competitors in a way to
preserve or enhance the consumer's and society's
well being. It combines the best elements of
marketing to bring social change in an integrated
planning and action framework with the utilization
of
communication technology and marketing
techniques. It also expects marketers to instill
social and ethical considerations into their
marketing decisions
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Difference between Selling and Marketing – Marketing is in fact the
act of 'bringing the product to market'. Selling is about closing a sale
and turning a potential buyer into a customer.

Selling has a product focus and is mostly product driven. It is only

the action part of marketing and has short-term goals of achieving
certain levels of revenue, profit or market share.

Selling is about overcoming objections. It is a one to one technique

where the seller helps the buyer to reach a decision. As part of the
marketing process, you need to uncover potential objections which
might prevent someone buying what you have for sale.

When the focus is on selling, the businessman thinks that sales

should start immediately after the production schedule is complete.
Also that the task of the sales department to sell whatever the
production department has manufactured.
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Aggressive sales methods are justified to meet this goal. Customer's

actual needs and satisfaction are taken for granted. Selling converts
the product into cash for the company in the short run.

Marketing is primarily about research – identifying potential buyers

and then finding the best way to introduce your product to them.
This usually involves some form of advertising. When you have
identified the potential customers, marketers will develop what is
called the 'marketing message' to try and reach them.
The more this message resonates with what the prospective
customers need or want, the more likely it is that you will be able to
sell your product or service to them.
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Marketing Management Process
Marketing management is a process of identifying customer needs
and wants and then developing a marketing program to satisfy
customer needs with a profit
A marketer needs to identify marketing opportunities by analyzing
and scanning external environment and collecting market related
information to estimate current market demand and forecast future
potential.
The marketer tries to find answer to the questions like:
1. What problems do the company's customers (potential customers)
have that the
offering (products or services) can solve better than those of other
marketers?
2. What is the profile of the customer having this consumption
problem?
3. What are the particular stages and circumstances
(actual/potential) that need
modifications in a company's marketing offer (products, prices,
distribution, or
promotion)?
The marketing manager assumes the role of a solution provider.
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Marketing Mix
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The 4 P's of marketing that are the elements of a marketing mix are:
Product: The products or services offered to your customer –
Their physical attributes, what they do, how they differ from your
competitors and what benefits they provide.
Price: How you price your product or service so that your
price remains competitive but allows you to make a good profit.
How price plays a role in your marketing strategy with respect to
differentiating your products or services from your competitors'.
Place (Also referred to as Distribution): Where your business
sells its products or
services and how it gets those products or services to your
customers. May also be used in your marketing strategy to
differentiate you from your competition.
Promotion: The methods used to communicate the features
and benefits of your products or services to your target
customers.
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The 4 P's of marketing that are the elements of a marketing mix are:
Product: The products or services offered to your customer –
Their physical attributes, what they do, how they differ from your
competitors and what benefits they provide.
Price: How you price your product or service so that your
price remains competitive but allows you to make a good profit.
How price plays a role in your marketing strategy with respect to
differentiating your products or services from your competitors'.
Place (Also referred to as Distribution): Where your business
sells its products or
services and how it gets those products or services to your
customers. May also be used in your marketing strategy to
differentiate you from your competition.
Promotion: The methods used to communicate the features
and benefits of your products or services to your target
customers.

Extended version of P’s

People
Process
Physical Evidence
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Customer Value and Satisfaction

1.Classification of Customer Value
2.Characteristics of Customer Value
3.Customer Satisfaction
4.Customer Delight
5.Monitoring and Measuring Customer
Satisfaction
6.Delivering Customer Value
7.Value Chain
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Customer Value and Satisfaction

Total Customer Value, is the perceived monetary

value of the bundle of economic, functional and
psychological benefits that consumers expect from
a given market offering. Customer's perceived
value is the difference between the prospective
customer's evaluation of all the benefits and all the
costs of an offering and the available perceived
alternatives. Total customer cost is the bundle of
costs that customers expect to incur in evaluating,
obtaining, using and disposing of the given market
offering.
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Customer Value and Satisfaction
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Customer Value
Customer delivered value is the difference between
total customer value and the total customer cost. Total
customer value is the bundle of benefits that customers
expect form given product or service.

Total customer cost is the bundle of costs customer

expect to incur in evaluating, obtaining, using, and
disposing of the product or service.

We have defined the concept of value as the net of

customer's expected benefits over the cost of the
product as explained in the Figure above. We will now
try to classify consumer expectations and find out
consumer relevant values that explain why consumers
choose one product type over another type or brand.

The three central propositions behind this classification

include the following:
1. Consumer choice is a function of a small number of
consumption values.
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Customer Value

These set of values are classified as functional or utilitarian value,

social value, emotional value, epistemic value and conditional value.
These values are often found in the purchase of categories like food,
grocery, computer peripherals, sporting events and games. The
functional value of a consumer choice is the perceived functional,
utilitarian or physical performance utility received from the choice
product's attributes. It is associated with economic utility theory,
popularly expressed in terms of rational economic reason.

Value definition is the set of attributes like reliability, durability and

price.

For example When somebody purchases a bar of soap, he is buying

it for the purpose of washing. The social value of a choice is the
perceived utility acquired because of the associations between one
or more specific social groups and consumer choice. A consumer's
choice gains social value by being linked with positively or
negatively stereotyped demographic socio-economic and cultural-
ethnic groups i.e. reference groups. Choices involving highly visible
products like bicycles and food, and services to be socially shared
like gifts, products used in entertainment are often driven by social
values. When someone is buying a washing soap, he also expects
that the soap will make him presentable in a societal setting.
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These set of values are classified as functional or
utilitarian value, social value, emotional value,
epistemic value and conditional value. These values
are often found in the purchase of categories like
food, grocery, computer peripherals, sporting events
and games.

The functional value of a consumer choice is the

perceived functional, utilitarian or physical
performance utility received from the choice product's
attributes. It is associated with economic utility
theory, popularly expressed in terms of rational
economic reason.

At the heart of such a value definition is the set of

attributes like reliability, durability and price. When
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The social value of a choice is the perceived utility

acquired because of the associations between one or
more specific social groups and consumer choice. A
consumer's choice gains social value by being linked
with positively or negatively stereotyped demographic
socio-economic and cultural-ethnic groups i.e.
reference groups. Choices involving highly visible
products like bicycles and food, and services to be
socially shared like gifts, products used in
entertainment are often driven by social values. When
someone is buying a washing soap, he also expects
that the soap will make him presentable in a societal
setting.
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The emotional value of a choice is the perceived utility acquired
from its capacity to stimulate the consumer's emotions or feelings. A
choice acquires emotional value when associated with specific
feelings or when it triggers or sustains those feelings. Products and
services are frequently associated with emotional responses. What
can be the emotional value associated with a detergent cake? It is
definitely related to the health of the consumer's children and the
protection that it provides to his/her family members.

The epistemic value of a choice is the perceived utility that comes

from the choice‘s ability to foster curiosity, provide novelty and
satisfy a desire for knowledge. New purchase and consumption
experiences, especially, offer epistemic value. However, even a
simple change like a shift from one ice cream flavor to another also
provides the consumer with epistemic value. Since all new products
provide some novelty, marketers should try to build some novelty
around the product.

Conditional value of a choice is the perceived utility acquired by a

choice as an outcome of some particular situation or circumstances
facing the customer e.g. products associated with a particular time
or event like coffee at breakfast. Some products have specific
climate or location benefit like sunscreen lotions; some are
associated with once-in-a-lifetime events like purchase of first car.
And some are used only in emergency situations like a dentist on a
Sunday afternoon. Conditional value is served best when we
associate the brand with usage situations. Examples include
Nescafe, which is served at the end of a hard day or on a lazy
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Classification on Values and Customer Roles

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Steps in Value Creation Process

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Customer Satisfaction
Customers make decisions about products and brands. Decision-making
is a matching
of customer's cognitive evaluation of expectations with the likely
performance expectation
from the product.
Marketing communication does a value promise to the customer and
customers tend to
compare the real performance of the product with this value promise. It
is often observed
that when a customer is satisfied, he speaks to a few people, but if he is
dissatisfied then
he is likely to speak to many people. It develops brand loyalty

Customer satisfaction has become the sole goal of organizations

because if customers are satisfied then an exponential revenue stream
will follow and profitability will increase.

Customer Delight
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MONITORING AND MEASURING CUSTOMER SATISFACTION

customer satisfaction is the key differentiator and increasingly has

become a key element of business strategy.

Satisfaction is a person's feelings of pleasure or disappointment resulting

from comparing
a product's perceived performance (or outcome) in relation to his or her
expectations.

Two important questions to be answered

1. Are they doing the right things from the customer's perspective?
2. Are they measuring what is important to them?

DELIVERING CUSTOMER VALUE 

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Generic Value Chain
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Michael Porter’s model on Value Chain

A tool called Value Chain for identification and creation of more customer
value. A business operates in a cyclical manner in which assets, inputs and
raw materials are used to design offerings, which are delivered through
channels of intermediaries to reach customers. This is the simplest
explanation that one can offer for a modern business process delivering
customer value.

Every business firm is a synthesis of activities that are performed to

design, produce, market, deliver and support its products and services.
The value chain identifies nine strategically relevant activities that create
value and cost in a specific business. This consists of five primary activities
that include inbound logistics, operations, outbound logistics, marketing
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Traditional Buyer Seller Relationship
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Modern Buyer Seller Relationship

CASE : First Citizen Club – Shoppers Stop

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MARKETING ENVIRONMENT AND ITS IMPACT
ON STRATEGIC PLANNING PROCESS
Competitive Environment
External Environment
1 Demographical Environment
2 Cultural Environment
3 Social Environment
4 Legal and Political Environment
5 Economic Environment
6 Natural Environment
7 Technological Environment
Environmental Scanning
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Competitive Environment

Market Entry Decisions

A company has to identify and
define the scope of business and
competitors with whom it is likely to
compete in the market. A
competitive environment allows
marketers to plan well in advance
about future marketing strategy.
The competitive environment often
determines the success or failure of
a product. If the level of competition
is strong and the competitor's
product is better in the market, the
Similarly,
chance excess supply
of success of products
in business is low. by competitive firms changes
the demand-supply equation and the product suffers in the
market. When we introduce a new product in the market, it
delivers higher value compared to the existing products and the
company becomes successful.

Success or failure largely depends on how competitors react to

company's offer.
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External Environment

Demographical Environment
Demography is the study of population and its characteristics.
Marketers are always interested in population related growth
indices because eventual market growth rate in the long run
depends largely on growth of population.

Cultural Environment
Cultural factors influence consumer's beliefs, values and norms.
Culture is the complex whole that includes knowledge, belief, art,
morals, laws, custom and any other capabilities and habits
acquired by a consumer as a member of the society. Its a distinct
way of life of a group of people and their complete design of
living.

People are using products and services, which are mostly

western. These are reflected in our food habits, dressing
patterns, choice of fashion garments and also in the way of living.
The degree of permissibility has increased substantially after the
opening up of economy and the younger generations are found to
be more westernized than the older generations. Growth of
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External Environment

Social Environment
Social environment has maximum direct effect on consumers.
Social forces shape consumption habit of people. Let us look at
processed food in Indian markets. Due to changes in the lifestyle
and more and more women taking up jobs, there is a rising
demand for processed and packaged food.
For e.g. Packaged brands of chicken and other frozen foods are
doing well in the Indian market.

Taste and consumer behavior also vary from place to place. In

India, brands like Dettol have a higher impact on people because
of its burning sensation, whereas Savlon does well in Europe due
to its mild nature. In rural India, black shampoo is preferred more
because women feel thatblack shampoo makes hair look glossier.
Italians drink beer before sleep whereas Germans prefer them
during lunch. McDonalds in India launched aloo tikki burgers as a
special offer to make its products suitable and appealing to
Indian consumers. Maggi noodles are more of a convenient food
in Indian market than a staple food. In Italy, a US company
that set a corn-processing plant found that its marketing effort
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External Environment

Legal & Political Environment

Government plays a great role in moderating the role of business in
the society through legislation. Business is expected to play a decent
role and practice fair play but sometimes it is necessary to control
business.

It is an extremely difficult task to understand all the laws related to

marketing because of the legislations at multiple levels. Certain
legislations brought at central government level whereas some are
practiced differently in different states of India. This is a critical issue
related to sales and different kind of taxes. Value Added Tax (VAT)
tries to simplify them, but it's not always possible to bring uniformity
in legislation across the states.

The pricing and promotion variables have received the most legislative
attention. Laws like Monopoly Restricted Trade Practices (MRTP) and
Foreign Exchange Regulation Act (FERA) are dumped in order to
promote growth of free enterprise in India. Business legislation in India
can be classified into legislation covering corporate affairs, consumer
protection, employee protection, specific sector protection like small
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External Environment

Economic Environment
Economic environment has the highest influence on the marketing
decisions, as it affects the purchasing power of the consumer.

Economic environment means macro economic factors like income

distribution, level of saving, debt and credit available to consumers
and stage in business cycle. They affect the marketing decisions in
combination with available economy of scale enjoyed by individual
firms.

The economic environment is extremely complex and it includes

dynamic business fluctuations that tend to follow a cyclic pattern,
generally composed of four stages,
namely recession, depression, recovery and prosperity.

The type, direction and intensity of a firm's marketing strategy depend

on the economic climate and business fluctuations

Lifestyle patterns also affect the marketer's decision.

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External Environment

Natural Environment

The finite, non-renewable natural resources are being consumed very

fast and there is little likelihood that they can be replenished in the
near future. Finite, non-renewable resources that include fuel and
gasoline are heading towards a big energy crisis for the world. If we
are not able to find out alternatives to fossil fuel consumption, it is
going to reverse the process of development and growth across the
globe.

Global warming, Green house effect, pollution control etc…..

Technological Environment

Technology is one of the dramatic forces that shape the lives of

people. Every new technology that is of the second order, is a force of
creative destruction. Technology has accelerated the pace of change
in the market place. Technological life cycles are shortening day by
day and new product introduction has become a phenomenon of the
market place. E.g. Internet Cell phones etc…
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Environmental Scanning

The goal of monitoring external environment is to influence the

marketing strategy by
identifying potential opportunities and threats, trends, and strategic
uncertainties in business.

It helps the management in taking decisions regarding where to

compete, how to compete and on what to compete.

The opportunity in business can be a trend or event that could lead to

significant upward change in sales and profit patterns.

Case Study: The body shop & marketing