BSM210 PRINCIPLES OF

MARKETING

LECTURE 2
 • In this lecture, you will be learning about:
Marketing planning and management
Forecasting and demand measurement
UNIT 2: Organising the marketing department
MARKETING Marketing controls and evaluation
MANAGEME Analysing marketing opportunities
NT AND Building customer satisfaction, value and
PLANNING retention
Customer relationship marketing
Marketing information research/system
 According to Philip Kotler, “Marketing management is the
analysis, planning, implementation and control of
programmes designed to bring about desired exchanges with
Marketing target markets for the purpose of achieving organisational
planning objectives. Marketing is related to markets and therefore
marketing management calls for integration of the various
and elements of market. It has the task of organising these
elements into an effective operating system so that it can
management serve both customer and business enterprise effectively.
Various functions of marketing management are:
 Assessing the Marketing Opportunities:
• Determination of marketing objectives and assessment of
the marketing opportunities for the firm, is an important
function of marketing management. The constantly
changing market conditions and opportunities make it
imperative for the marketing management to come out
with planned programmes to meet the challenges, and
reap the opportunities.
   Planning the Marketing Activities:
• Planning is an important managerial function. Planning
of marketing activities is a crucial task and involves
numerous steps. It involves planning effective strategies
to achieve the desired marketing objectives. It is
concerned with formulation of policies relating to
product, price, channels of distribution, promotional
measures, forecast of target sales etc. Planning provides
Continuatio the basis for an effective marketing for the enterprise.
 Organising the Marketing Activities:
n • Another significant function of marketing is organising it
implies determination of various activities to be
performed and assigning these activities to right person,
so that marketing objectives are achieved. In the light of
the changing concept of marketing, it is necessary that
the organisation structure is flexible and accommodative.
This will help in better interaction between organisation
and environment.
  Co-Ordinating Different Activities of Enterprise:
• Even the best of planning will not be rewarding if there is
improper coordination between different activities of the
organisation. Marketing involves various activities and these are
inter-related and interdependent. Product decisions, pricing
strategies, channel structure research activities all require
proper coordination. Only then the objectives can be achieved.
 Directing and Motivating the Employee:
Continuatio • A good direction is a must for effective performance of
marketing functions. Direction helps in rightful performance of
n the work. Different leadership style are practised to guide the
subordinates. A leader directs his subordinates and ensures
through effective supervision, that the performance is as per
planned specification. At the same time, it is necessary that
employers are properly motivated. Motivation not only helps in
better performance by the employee but also holds him back to
the organisation for longer periods.
 • These days organisations are very serious as far as
their motivation policies are concerned. New ways of
motivation are being introduced so that the
employee gives his best of services.
Evaluating and Controlling Marketing
Efforts:
• In order to have a profitable venture, marketing
Continuatio manager must on a continuous basis, evaluate the
marketing efforts. This will help him in knowing the
n deficiencies if any, which can be corrected
beforehand only and proper adjustments can be
made with the changing environment. Controlling is
a managerial function concerned with comparison of
actual performance with the standard performance
and locating the shortcomings if any, finally
corrective measures are taken to overcome the
shortcomings.
 • Marketing management process involves the following:
 Managerial marketing process starts with the
determination of mission and goals of the entire
Marketing enterprise and then defines the marketing objectives to
be accomplished.
management  Evaluate corporate capabilities on the basis of our
strengths and weaknesses.
process  Determine marketing opportunities which have to be
capitalised. We have to identify and evaluate unsatisfied
and potential customers’ needs and desires. Market
segmentation will enable us to select target markets on
which we can concentrate our efforts. Marketing
opportunities are influenced by marketing environment,
competition, government policies, mass-media,
consumerism, public opinion, distribution structure, etc.
 Once the company has full information
regarding marketing opportunities, they can
formulate marketing strategies in the form
of dynamic action-oriented formal plans to
achieve mission, goal, and objectives. A
strategy is a pattern of purposes and
Continuatio policies, a planned course of action in
pursuit of clearly stated objectives in the
n face of limited resources, and intelligent
competition.
Marketing action plans or programmes are
to be implemented through proper
communication, coordination as well as
motivation of marketing personnel.
  Performance according to plan is duly
assured by effective marketing control. An
effective control system is essential to
measure and evaluate the actual results of
the marketing strategy. The results are
evaluated against our desired objectives.
Continuatio Feedback of evaluation enables marketing
management to revise, adopt, or modify
n goals and objectives and replan on the basis
of feedback of evaluation.
 Marketing process is on-going or dynamic
and it must adapt itself to the ever-changing
environmental needs.
Forecasting and demand measurement

• Forecasting is the art of estimating future demand by anticipating what buyers

are likely to do under a given set of future conditions. Forecasting and demand
measurement requires an analysis of the market with the aim of expressing it
in quantitative (numeric) quantities both present and in future.
Reasons of forecasting
Businesses are forced to look well ahead in order to plan their investments,
launch new products, decide when to close or withdraw products and so on.
The forecasting process is a critical one for more businesses. Key decisions that
are derived from a forecast include:
 Employment levels required
  Promotional mix
 Investment in production capacity.
Types of forecasting
Macro forecasting
Is concerned with forecasting markets in total. This is
about determining the existing level of market
demand and considering what will happen to market
Continuatio demand in the future.
n Micro forecasting
Is concerned with detailed unit sales forecasts. This
is about determining a product’s market share in a
particular industry and considering what will happen
to that market share in the future.
 Forecasting selection depends
on the following factors
• The degree of accuracy required
Continuation • The availability of data and
information
• The time horizon that the forecast is
intended to cover
• The stage of the product in its life
cycle
Continuatio
n
 How can future market demand and company demand be forecast?
• Very few products or services lend themselves to easy forecasting.
These tend to involve to involve a product whose absolute level or
trend of sales is fairly constant and where competition is either non-
existent (e.g monopolies such as public utilities)or stable (pure
oligopolies). In most markets, total demand and company demand
are not stable which makes good sales forecasting a critical success
Estimating factor.
Three stages of forecasting
future A common method of preparing a sales forecast has three stages:

demand 1. Prepare a macroeconomic forecast- what will happen to overall

economic activity in the relevant economies in which a product is
sold?
2. Prepare an industry sales forecast- what will happen to overall
sales in an industry based on the issues that influence the
macroeconomic forecast?
3. Prepare a company sales forecast- based on what management
expect to happen to the company’s market share.
Common sales forecasting techniques

Sales forecasts can be based on three types of information:

 What customers say about their intentions to continue buying products in the industry
 What customers are actually doing in the market
 What customers have done in the past in the market
Time series analysis
Time series analysis involves breaking past sales down into four components
1. The trend- are sales growing, “flat lining” or in decline
2. Seasonal or cyclical factors- sales are affected by swings in general economical activity {e.g increases in
the disposable income of consumers may lead to increase in sales for products in a particular industry}.
Seasonal and cyclical factors occur in a regular pattern
3. Erratic events-these include strikes, fashion fads, war scares and other disturbances to the market which
need to be isolated from past sales data in order to be able to identify the more normal pattern of sales.
 • Businesses organize their marketing units in line with business
objectives and available resources. Marketing unit organization
also reflects the role and importance of marketing within the
business. Marketing plays a key role in any business; its goal is
to ensure the growth of revenue and profit by identifying and
meeting customers’ needs.
• To reflect marketing’s strategic role, many businesses appoint a

Organising director of marketing or chief marketing officer at board level.

This helps to ensure that the business has a strong customer
focus and can build high levels of customer satisfaction.
the market  Alignment

department If your business operates in different market sectors, align your

marketing unit with the most important sectors. Your business
could have different marketing teams for government,
manufacturing and financial services sectors, for example. Each
team would develop customized marketing and communications
programs for its sector to meet revenue and profit objectives. This
approach is valuable if your business wants to position itself as a
leading player in specific sectors.
  Skills
Marketing units need a range of skills. If your marketing unit manages a number
of different activities, you can organize your team to focus on specific activities,
such as advertising, events, newsletters or press relations. This helps to
improve team skills and ensures that each activity receives specialist support.
 Outsource
If you don’t have the resources to handle all the marketing activities yourself,
Continuatio you can outsource them to an agency, such as an advertising agency or
marketing services consultancy. You can access specialized skills and services
for specific events or campaigns. Firms that offer outsourced marketing
n services have developed expertise and can offer independent advice and
guidance.
Sales integration
 if your company markets products through a direct sales force, you can
improve overall performance by integrating sales and marketing activities
and collaborating with the sales department. When your marketing team
works on campaigns to generate sales leads, they should review the leads
with the sales force to identify quality leads and plan a communications
program to move prospects toward a buying decision.
Marketing controls and evaluations

Control involves measurement, evaluation,

There is no planning without control.
and monitoring. Resources are scarce and
Marketing control is the process of
costly so it is important to control marketing
monitoring the proposed plans as they
plans. Control involves setting standards. The
proceed and adjusting where necessary. If
marketing manager will than compare actual
an objective states where you want to be and
progress against the standards. Corrective
the plan sets out a road map to your
action (if any) is then taken. If corrective
destination, then control tells you if you are
action is taken, an investigation will also need
on the right route or if you have arrived at
to be undertaken to establish precisely why
your destination.
the difference occurred.
There are many
approaches to control
• Market share analysis.
• Sales analysis.
• Quality controls.
• Budgets.
• Ratio analysis.
• Marketing research.
• Marketing information systems (MkIS).
• Feedback from customers satisfaction surveys.
• Cash flow statements.
• Customer Relationship Management (CRM) systems.
• Sales per thousand customers, per factory, by segment.
 • Location of buyers and potential buyers.
• Activities of competitors to aspects of your
plan.
• Distributor support.
• Performance of any promotional activities.
Continuatio
• Market reaction/acceptance to pricing
n polices.
• Service levels.
• …and many other methods of
monitoring and measurement.
Analysing marketing opportunities

• Market opportunity analysis

is a process to assess the
attractiveness of a business
opportunity.
Continuation
• There are 6 key questions that we need answers when doing market opportunity analysis:
1. What type of an opportunity is this?
• An unmet customer need
• An improvement over a product/service already on the market
• Disruptive idea or technology
• Horizontal improvement which will improve functional operations
• An opportunity that is targeted to a specific industry segment
 2. How are people meeting this need today?
• Direct competitors
• Indirect competitors
• Substitutes
• Collaboration
• Think Porter’s 5 Forces
Continuatio
n
Continuation

3. Is another company already filling this need?

4. If so, how can I differentiate my company’s product or service to create a competitive advantage? If
not, is there sufficient market demand?
5. Is this opportunity financially viable both to our customers and to our company?
• How will this impact cash flow?
• What investment do we need to make to be in this space?
• What about distribution channels?
• Will we need to train our sales channels to market this opportunity?
• Will we need to establish partner relationships to market this product or service?
• Can we market this to our existing customer base or will we need to chase different customer
segments?
6. What external factors should we be considering that might impact this opportunity?
• Think STEEP analysis: social, technological, economic, ecological, political/legal
Continuatio
n
 • To succeed or simply to survive, companies need a new philosophy.
To win in today's marketplace, companies must be customer-centred -
they must deliver superior value to their target customers. They must
become adept in building customer relationships, not just building

Building products.
• Too many companies think that obtaining customers is the job of the

customer marketing or sales department. But winning companies have come to

realise that marketing cannot do this job alone. Although marketing
plays a leading role, it is only a partner in attracting and keeping
satisfaction, customers. The world's best marketing department cannot
successfully sell poorly made products that fail to meet consumer

value and needs. The marketing department can be effective only in companies
in which all departments and employees have teamed up to form a
competitively superior customer value-delivery system.
retention • More than 35 years ago, Peter Drueker observed that a company's
first task is :co create customers'. However, creating customers can be
a difficult task. Todays customers face a vast array of product and
brand choices, prices and suppliers. The company must answer a key
question: How do customers make their choices?
 • There are large offering of products and services available in
the market then why the customer should choose a given
company’s product. According to various research and
studies it has been confirmed that consumer will purchase
products, which given them maximum perceived value.
• This value comes from calculating the cost associated with
the emotional level decision like the brand image, corporate
brand, sales personnel image and functional image. This
Customer value converts to total customer cost by including purchase
cost, time-energy in evaluation of product and intuitive cost.
value • Consumer will take decisions after considering the total cost
associated with purchase, perceived and otherwise. If after
the purchase product performs as expected than customer
is considered satisfied. A completely satisfied customer is
likely to repurchase the product and even promote the
product through a word of mouth. Companies are aiming for
total customer satisfaction, which can be achieved after
understanding customer expectation and then delivering as
per the expectation.
 . Consumers form judgements about the value of marketing offers
and make their buying decisions based upon these judgements.
Customer satisfaction with a purchase depends upon the product's
performance relative to a buyer's expectations, A customer might
experience various degrees of satisfaction. If the product's
performance falls short of expectations, the customer is dissatisfied.
If performance matches expectations, the customer is satisfied. If
performance exceeds expectations, the customer is highly satisfied
or delighted.
Customer But how do buyers form their expectations? Expectations are based
on the customer's past buying experiences, the opinions of friends
satisfaction and associates, and marketer and competitor information and
promises. Marketers must be careful to set the right level of
expectations. If they set expectations too low, they may satisfy those
who buy, but fail to attract enough buyers. In contrast, if they raise
expectations too high, buyers are likely to be disappointed.
Value chain
• Customer value and satisfaction are important ingredients in the
marketer's formula for success. But what does it take to produce and
deliver customer value? A value chain is a major tool/or identifying ways
to create more customer value. Michael Porter proposed the value
chain as the main tool for identifying ways to create more customer
value.
• Every firm consists of a collection of activities performed to design,
produce, market, deliver and support the firm's products. The value
chain breaks the firm into nine value-creating activities in an effort to
understand the behaviour of costs in the specific business and the
potential sources of competitive differentiation. The nine value-creating
activities include five primary activities and four support activities.
 • The primary activities involve the -sequence of bringing materials into the business
(inbound logistics), operating on them (operations), sending them out (outbound
logistics), marketing them (marketing and sales) and servicing them (service). For a long
time, firms have focused on the product as the primary means of adding value, but
customer satisfaction also depends upon the other stages of the value chain. The support
activities occur within each of these primary activities. For example, procurement involves
obtaining the various inputs for each primary activity - only a fraction of procurement is
done by the purchasing department. Technology development and human resource
management also occur in all departments. The firm's infrastructure covers the overhead

Continuatio of general management, planning, finance, accounting and legal and government affairs
borne by all the primary and support activities.

n
• Under the value-chain concept, the firm should examine its costs and performance in
each value-creating activity to look for improvements. It should also estimate its
competitors' costs and performances as benchmarks. To the extent that the firm can
perform certain activities better than its competitors, it can achieve a competitive
advantage.
• The firm's success depends not only on how well each department performs its work, but
also on how well the activities of various departments are coordinated. Too often,
individual departments maximize their own interests rather than those of the whole
company and the customer. For example, a credit department might attempt to reduce
bad debts by taking a long time to check the credit! of prospective customers: meanwhile,
salespeople get frustrated and customers wait. A distribution department might decide to
save money by shipping goods hy rail; again the customer waits. In each case, individual
departments have erected walls that impede the delivery of quality customer service.
Continuatio
n
Customer retention
Companies need to develop policies and measure at
retaining customers along with attracting new
customers. This art of retention can be achieved
through customer relationship management (CRM).
In CRM the task is to develop strong consumer based
brand equity, which is done by converting first time
buyer to repeat buyer to a client to a member to
advocates and finally to partners. During these course
companies can look forward to offering financial
benefits in terms of discount for frequent buyers or
also by association with a social cause.
Companies are in business to make the profit.
Therefore, it has to identify profitable customers.
Profitable customers provide a revenue stream more
than the expense stream on retaining them. And this
revenue stream should be higher for a company to
have a competitive advantage. More and more
companies are deploying total quality management
approach across the organization to build and deliver
customer satisfaction.
 • Relationship marketing involves creating,
maintaining and enhancing strong relationships with
customers and other stakeholders. Increasingly,
marketing is moving away from a focus on individual
transactions and towards a focus on building value-
Customer laden relationships and marketing networks.
• Relationship marketing is oriented more towards
relationship the long term. The goal is to deliver long-term value
to customers and the measure of success is long-
marketing term customer satisfaction. Relationship marketing
requires that all of the company's departments
work together with marketing as a team to serve
the customer. It involves building relationships at
many levels - economic, social, technical and legal -
resulting in high customer loyalty .
Continuation

• We can distinguish five different levels or relationships that can be formed with customers who have purchased a
company's product, such as a car or a piece of equipment:
 Basic. The company salesperson sells the product, but does not follow up in any way.
 Reactive. The salesperson sells the product and encourages the customer to call whenever he or she has any questions
or problems.
 Accountable. The salesperson phones the customer a short time after the sale to check whether the product is meeting
the customers expectations. The salesperson also solicits from the customer any product improvement .suggestions and
any specific disappointments. This information helps the company continuously to improve its offering.
 Proactive. The salesperson or others in the company phone the customer from time to time with suggestions about
improved product use or helpful new products.
 Partnership. The company works continuously with the customer and with other customers to discover ways to deliver
better value.
Marketing information system components
Internal records

 The Company can collect information through its

internal records comprising of sales data, customer
database, product database, financial data,
operations data, etc. 

 Marketing intelligence system

 The marketing intelligence system provides the data

about the happenings in the market, i.e. data related
to the marketing environment which is external to
the organization. It includes the information about
the changing market trends, competitor’s pricing
strategy, change in the customer’s tastes and
preferences, new products launched in the market,
promotion strategy of the competitor, etc.
Continuation
Marketing research
 The Marketing Research is the systematic collection, organization,
analysis and interpretation of the primary or the secondary data to
find out the solutions to the marketing problems. Several
Companies conduct marketing research to analyse the marketing
environment comprising of changes in the customer’s tastes and
preferences, competitor’s strategies, the scope of new product
launch, etc. by applying several statistical tools. 
Marketing decision support system
 It includes several software programs that can be used by the
marketers to analyse the data, collected so far, to take better
marketing decisions. With the use of computers, the marking
managers can save the huge data in a tabular form and can apply
statistical programs to analyse the data and make the decisions in
line with the findings.
Continuation Marketing information system diagram
END OF
LECTURE!!!
09/09/2020
MRS ABBY N.MUMBA