MARKETING MANAGEMENT

14 edition
th

1
Defining Marketing
for the 21st Century
The American Marketing Association’s definition:
Marketing is an
organizational
function and a 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.
What is Marketing Management?
Marketing
Management is the
art and science of
choosing target
markets and getting,
keeping, and growing
customers through
creating, delivering,
and communicating
superior customer
value.
The basic 3 Pillars of Marketing

MARKETING

Satisfaction

Retention
Value
What is Customer’s Perceived Value ?
Customer Perceived Value (CPV): The difference
between the prospective customer‘s evaluation of
all benefits and all the cost of an offering and the
perceived alternatives.
Customer’s Perceived Value (CPV) =
Total Customer’s Benefit (TCB) - Total
Customer’s Cost (TCC)
Customer’s Perceived Value (cont)…
Total Customer’s Benefit (TCB): Refers to the
perceived monetary value of the bundle of
economic, functional and psychological benefits
customer expect from a given market offering.
Total Customer’s Cost (TCC): the bundle of
costs customers expect to incur in evaluating,
obtaining, using and disposing of the given
market offering.
Customer’s Perceived Value (cont)…
Total Total Delivered
Customer’s Customer’s Costs Value
Benefits

Money
Product

Time
Service

Effort
Personnel

Psychological
Image
More on Customer’s Perceived Value:
Value Chain and Value Delivery Network
The Value Chain is a tool for identifying ways to create
more customer value internally, because every firm is a
combination of primary and support activities performed to
design, produce, market, deliver, and support its product.

- To provide superior value to the customers, each internal

value stick should tidily bundled together:

1. Primary Activities 2. Support Activities

 More on Customer’s Perceived Value:
The Value Chain (cont)…
Primary Activities:
1.Inbound Logistics (Bringing
materials into business)
2.Operations (Converting inputs into
output)
3.Outbound Logistics) Shipping out
final products
4.Marketing & Sales
Support Activities: 5.Servicing
1.Procurement
2.Technological development
3.Human resource management
4.Financial support
5.Firm’s infrastructural development
More on Customer’s Perceived Value:
The Value Chain (cont)…

The Structural Framework for Value Chain

More on Customer’s Perceived Value:
The Value Delivery Network
Value Delivery Network is the network made up of the
company, suppliers, distributors, competitors and
ultimately customers who partner with each other to
improve performance of the entire system. Its an
external networking.
- Value delivery network can be
formed and work through:
1. Horizontal Integration
(Jamuna + Basundhara [developer])

2. Vertical Integration
(Square consumer [Meril] + Prothom-Alo)
More on Customer’s Perceived Value:
Value Delivery Network (cont)…
What is Customer’s Satisfaction ?

Product’s Perceived Buyer’s

Performance Satisfaction
Expectation

_ =
What is Customer’s Satisfaction ?

Satisfaction : Satisfaction a person’s feelings of pleasure or

disappointment resulting from comparing a product’s
perceived performance (outcome) in relation to his or her
expectations.
- The customer’s satisfaction mainly depends on the
product’s actual delivery/ performance (P) in relation to
the customer’s expectation (E).

If, P < E Dissatisfied

If, P = E Satisfied

If, P > E Highly Satisfied/Delighted

Customer’s Satisfaction (cont)…
Monitoring Customer’s Satisfaction

Periodic Surveys
Customer Loss Rate

Mystery Shopper
Competitors’ Performance
What is Customer Retention ?
Customer Retention is
Retention the activity that a selling
organization undertakes in order to reduce customer
defections and keeping them with the organization for
a long possible time.
• It is more than giving the customer what they expect, it’s
about exceeding their expectations so that they become
loyal advocates for the organization and its products.
- Customer retention can be ensued by:
1. Customer Relationship Management (CRM)
2. Partner Relationship Management (PRM)
Customer Retention (cont)…
Customer Relationship Management is the overall
process of building and maintaining profitable
customer relationships by delivering superior
customer value and satisfaction.
- It deals with acquiring, keeping and growing customers.
And building a long-term connection between the
company and the consumer.

Partner Relationship Management refers to the process

of maintaining a profitable relationship through a win-
win dealing with all the partners working within the
organization and outside in order to deliver superior
customer value.
Customer Retention (cont)…
Need and Types of Need
 Stated Needs – the customer wants an inexpensive car.
 Real Needs – the customer wants a car whose
operating cost, nor 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 friends
to see him/her as a savvy customer.
Demand and Demand States
 Negative Demand
 Nonexistent Demand
 Irregular Demand
 Latent Demand  Full Demand
 Declining Demand  Overfull Demand
 Unwholesome
Demand
Demand and Demand States
Negative Demand
Dema
A major part of the market dislikes the
product and may even pay a price to
avoid it - Vaccinations, Dental work,
Blood donations and Operations, for
instance.

- Marketer’s task is to analyze why is it

happening and needs to offer
marketing programs like – product
redesign, lower prices and positive
promotions that can change the
attitude. Make it into their likings, etc.
Demand and Demand States
Nonexistent Demand
Target consumers may be unaware of or uninterested in the
product. Farmers may not be interested in a new farming
method, and college students may not be interested in
foreign-language courses.
Eg. Insurance policy,
New idea/ technology etc.

Marketer’s task is to find out

ways to connect the benefits
of the product with the
person’s natural needs and
interests.
Demand and Demand States

Latent Demand

Many consumers may share a strong

need that cannot be satisfied by any
existing product. Eg. Web portal for
the Tourism Industry of Bangladesh,
Medicine for Cancer.

Marketer’s task is to measure the

size of the potential market and
develop a product / service to fulfill
this need.
 Demand and Demand States

Declining Demand
Consumers begin to buy the products
less frequently or not at all. Every
organization faces declining demand
for one or more of its products or
services. E.g. Type writer compared to
Computer.

The Marketer must analyze the reason

for decline and must find a way (which
can be redesigning the product or
service or even offering a completely
new product or service) to reverse the
declining demand.
Demand and Demand States
Irregular Demand
Consumers purchases vary on a
seasonal, monthly, weekly, daily or
even hourly basis. Many organizations
face demand causing problems of idle or
overworked capacity. E.g. – Cold drinks
companies, ice cream manufacturers,
Water Kingdom during the Winter
Season. Umbrella, Raincoats, etc.

Marketing task called as Synchro-

marketing, is to find ways to alter the
pattern of demand through flexible
pricing, promotion, and other
incentives.
 Demand and Demand States

Full Demand
Consumers are adequately buying
all the products put in the
marketplace. Organization faces
full demand when they are
pleased with their volume of
business. E.g. Cell phones –
Nokia/ Samsung.

Marketing task is to maintain the

current level of demand in the
face of changing consumer
preferences and increasing
competition. The organization
must maintain or improve quality
and continually measure
Demand and Demand States

Overfull Demand
More consumers would like to buy
the product that can be satisfied.
Some organization face a demand
level that is higher than they can or
want to handle. Eg. Utilities services
in Bangladesh.
Marketing task called De-marketing
(Which includes raising prices or
stopping sales promotion) is
sometimes required for these
organizations. Selective de-marketing
can also be done the aim of which is
to reduce demand for those parts of
the market which are less profitable
or less in need of the product or
service.
 Demand and Demand States

Unwholesome Demand

Sometimes consumers may be

attracted to products that have
undesirable social consequences.
Eg. Cigarettes, Alcohol, Hard drugs.

The marketing task is to get people

who like something to give up,
using such tools as spreading fear
message, price hikes, and reduced
availability.
Company Marketing Orientations…
Concepts of Marketing
Company (Marketing) Orientations…
Production concept is the idea that consumers will
favor products that are widely available or highly
affordable.

- Efficient production and effective distribution

channel is important to achieve the goal.
- Price of the products remains relatively low so that the
potential customers can afford it.
- Countries with inexpensive labor and efficient
technology; like china, mostly follow this concept to
expand and dominate the market.
Company (Marketing) Orientations…
Production Concept
Company (Marketing) Orientations…
Product concept is the idea that consumers will
favor products that offer the most quality,
performance, and features for which the
organization should therefore devote its energy for
making continuous improvements.

- Followers of this concept, focus on making superior

products and improving them over time.
- Research & Development activities for innovation
and putting emphasis on customer preference is
essential for following this concept.
Company (Marketing) Orientations…
Product Concept
Company (Marketing) Orientations…
Selling concept is the idea that consumers will not buy
enough of the firm’s products unless it undertakes a
large scale selling and promotion effort.
- Communicating with the customers properly and
creating strong appeal about the products or
services among them.
- Purpose of following this concept is to sell more stuff
to more people to make more profit.
- The selling concept is practiced most aggressively with
unsought goods.
Company (Marketing) Orientations…
Selling Concept
Company (Marketing) Orientations…
Marketing concept is the idea that achieving
organizational goals depends on knowing the
needs and wants of the target markets and
delivering the desired satisfactions better than
competitors do.
- Customer is the boss – yesterday, today and
tomorrow.
- Instead of a product-centered, “make and sell” philosophy,
business shifted to a customer-centered, “sense and
respond” philosophy by this concept.
Company (Marketing) Orientations…

Marketing Concept
The Selling and Marketing Concepts
Contrasted...

Source: Adapted from Kotler et al. (2008:17)

Company (Marketing) Orientations…
Societal marketing concept is the idea that a
company should make good marketing
decisions by considering consumers’ wants,
the company’s requirements, consumers’ long-
term interests, and society’s long-run
interests.

- Thinking and acting as a member/part of the

society (participating in Corporate Social
Responsibilities [CSR] activities).
Company (Marketing) Orientations…

Societal Marketing
Concept
Company (Marketing) Orientations…
The Holistic Marketing concept is based on the
development, design & implementation of
marketing programs, processes & activities
that recognizes that “everything matters” in
marketing – and that a broad, integrated
perspective is often necessary.

4 broad components characterizing holistic

marketing: Relationship marketing, Integrated marketing,
Internal marketing, & Performance marketing
 Holistic Marketing Concept…
Other Depts.
Senior
Marketing Management Channels Communications
Dept.
Internal Products &
Integrated
Services
Marketing Marketing
Holistic
Marketing

Ethics

Legal Relationship Financial

Performance Environment
issues Marketing Agencies
Marketing concern
Community Sales Revenue Customers Partners

Brand & Customer equity

Company (Marketing) Orientations…

Holistic Marketing
Concept
How Business and
Marketing are changing?
Information Customer Empowerment
Technology
Customization
Globalization
Heightened Competition
Deregulation
Industry Convergence
Privatization
Disintermediation
END of CHAPTER - 1