MARKETING

MANAGEMENT
CORE CONCEPTS of MARKETING

TRANSACTIONAL and RELATIONSHIP MARKETING

CASE STUDY:
Marketing is the process of getting potential clients or
customers interested in our products and services. Marketing
involves researching, promoting, selling, and distributing our
products or services.

This discipline focuses on the study of market and consumer

behaviours and analyzes the commercial management of
companies in order to attract, acquire, and retain customers by
satisfying their wants and needs and instilling brand loyalty.

The following are the five CORE

CONCEPTS of Marketing:

Needs,
  Marketing Value and
wants and
Offerings Satisfaction
demands
Exchanges
and
Market
Relationshi
p
 Needs, wants and demands

Needs
Identifying of unfulfilled needs is the pre-condition of making successful of marketing
activities. Marketers try to satisfy the needs of customers. Actually, needs are felt of deprivation
or lack of something. Marketers investigate and collect data on these needs of the customers.

For example, needs are food, clothing, warmth, safety, shelter etc.

Wants
Wants are the options of satisfying needs shaped by culture and individual personality. Human
beings must require food but what type of food they will take that is depended on their
individual cultures. Maximum satisfaction of customers need depends on the quality of a
product. Our assets are limited but our wants are many, for this reason marketers try to satisfy
the unlimited wants by limited assets.

Demands
When needs arise, wants became for specific products that are backed by the ability and
willingness of consumers to buy the products that is call demands. In demand, there is a vital
relation with time. Need is one kind of wish, want is a selected process of need and the selected
thing when it fulfils the ability and willingness then it becomes the demand.
A rich man has demand for a Mercedes Car. In addition, rich man will buy it next
month. Thus, it is a demand for the rich man. But it is need for middle class person and want for
poor man. All are actually classified by Money, ability, and willingness.
Marketing Offerings
Marketing Offering is that what ensures consumers’ satisfaction. Marketing offer is one kind of
offer that marketer makes as per requirements of a consumer. The marker tries to offer standard
product that satisfy the needs of a consumer in terms of quality, quantity, price etc. Marketing
offering can be ‘tangible’ or intangible’. The marketing offering is explained below.

Products
Product is a thing that provides both physical and psychological satisfaction to the customers. Actual
product features are colour, branding, packaging, labelling etc. There are two kinds of product
available, that are tangible and intangible. Marketing considers product benefits and services.

Therefore, product is very important for marketing offering because marketing offering is fully
dependent on product.

Services
All kinds of things that are offered to a market to satisfy consumer wants and needs are called
Services. Service is a work or benefit that is given by one party to another party. Service is intangible.
For example service of doctor, lawyer, hotel service, training service,etc.

Experiences
Experience is acquired real knowledge about any particular thing. Experience is to do, to see, to feel
something by acquired knowledge or skilled. Experience in marketing has an experimental value.
Any kind of business organization will not appoint their employees who do not possess sufficient
experience for the job. A company provides more facility, salary or promotion to an employee based
on his experience only.
 Value and Satisfaction
Value and satisfaction is one of the core concepts of marketing. They are
explained below in details.

Value
Value is the capacity of a product or service. Normally value is determined by
the level of satisfaction of customers. If satisfaction level is low, it means the
value of the product is low and consumer will leave this product. Customers
spend money, time, power and mental labour for buying a product. For this
reason, the consumer wants the best value of a product.

 Satisfaction
Satisfaction is like a desire of mind that can not be measured or can not be
quantified. The purpose of marketing is the satisfaction of customers by
creating value of a product and maintain a long-term relationship with the
customers. The satisfaction of customer is also depended on quality of the
product or the quality of the service provided. If the satisfaction level of the
customer is too low, then one’s customer will go to the competitors. On the
other hand, if their satisfaction level is too high that we cannot achieve then
too our customers will go to the competitors. So, we have to determine and set
the level of satisfaction as middle or normal so that the customers come back
and buy our product again.
Exchanges and Relationships
Exchange and relationship also plays a vital role in the core concept of
marketing.

Exchanges
Exchange is very basic concept of marketing. Exchange is one kind of activity
that creates value and this value is provided to other party. In exchange money
is always needed. Without money the exchange process is not possible.
Marketers provide product, service and idea to the customers in exchange of
money.

Relationship Marketing
Customer is the king in the business. If we want a boost in the business, we
have to create a good relationship with our customer. We have to keep our
customers happy by satisfying his or her needs in terms of quality, price, time,
quantity, regularly in supplying. If the customer understands the quality, value
or facilities of our product he will build the goodwill for our company. As a
consequence it will increase more customers.
MARKET
Marketing follows market. Market is a place where
buyers and sellers come in touch with detailed
information about what sellers are offering and
what buyers are ready to buy. A market is where
different types of transactions happen. In market,
the goods flow from the sellers to the buyers and
money flows from buyers to reach sellers to
complete the exchange.
TRANSACTIONAL and RELATIONSHIP
MARKETING
TRANSACTIONAL
MARKETING is a business
strategy that focuses on single,
"point of sale" transactions. The
emphasis is on maximizing the
efficiency and volume of
individual sales.
 The transactional approach is
based on the four traditional
elements of marketing,
sometimes referred to as the four
P's:
 Product -- Creating a product
that meets consumer needs.
 Pricing -- Establishing a product
price that will be profitable while
still attractive to consumers.
 Placement -- Establishing an
efficient distribution chain for
the product.

RELATIONSHIP MARKETING
refers to those marketing activities
that are aimed at developing and
managing long-term relationships
with the customers.
The details about the customer, his
buying patterns, contacts, etc. are
maintained in a sales database and
an account executive is assigned to
fulfill the needs of the customers
and maintain the relationships
successfully.
Relationship marketing recognizes
the value of a customer and the
significance of keeping good
relations with him.
Difference: Transactional Marketing vs
Relationship Marketing
Transactional Marketing Relationship Marketing
1) Transactional marketing is based on
a single sale formula and geared 1) Relationship Marketing promotes
towards gaining short term benefits. customer loyalty and improves
innovative ways of doing business
2) In transactional marketing, customer
for long-term customer retention.
interaction is minimal.
2) In relationship marketing, customer
3) Transactional Marketing focuses on
interaction is frequent.
increasing the efficiency and overall
quantity of individual sales. 3) Relationship marketing is more
about building a long-lasting
4) Transactional marketing leads to a
relationship with the customers.
low customer commitment.
4) Relationship marketing leads to a
5) The key objective of transactional
higher commitment.
marketing is to make the sale or get
the order. 5) The key objective of relationship
marketing is to become the sole
6) Focuses on product benefits.
supplier in the market.
6) Focuses on value to customer.
Example of Transactional Marketing ---- A sales agent who tries to
persuade the customer to buy the product by describing the
benefits of the product and once his product is sold he never gets
back to the customer and hence, no relationship is made.

Example of Relationship Marketing---- Lay’s, America’s top potato

chip brand, took relationship marketing to new heights when it
launched its “Do Us a Flavour” campaign, which invited the public
to get involved in the process of creating and choosing new chip
flavours. It did this by asking customers to submit their own
unique flavour ideas. The top ideas were manufactured, then Lay’s
once again asked customers to choose their favourite from the
bunch. This is a great example of relationship marketing as Lay’s
gave its customers massive creative control of its product.
MKIS IN AMERICAN AIRLINES
The evolution of Marketing Information
System in the airline industry marks a shift
towards the application of IT functionality for
expertise exploitation where one organization
leverages its unique knowledge and expertise
exploitation where one organization leverages
its unique knowledge and expertise obtained
through superior IT functionality to influence
the behaviour of other channel members.
 American Airlines has a long tradition of exploiting information technology in
inter firm
Relationships.
Since the introduction of Sabre in the 1960s, the company has used reservation
information in its marketing and sales efforts. The U.S. Department of
Transportation (DOT), ruled in 1987 that the tapes of other reservation systems had
to be made available to all U.S. carriers. This allowed American Airlines to have
access to reservation data from systems other than their own Sabre system. Since
almost all (98%) U.S. Travel agencies do their bookings on one of the four major
reservation systems (Travel Weekly 1992),the DOT ruling allowed American Airlines
to build a consolidated database containing the booking behaviour of each of the
approximately 33,000 travel agencies in the U.S. at that time. It is important to
realize that the complete set of tapes provides reservation information for all
companies in the industry, including competitors. The consolidated CRS database
could be updated monthly and combined with American internal databases on
historic booking behaviour and online information from Sabre. In the beginning,
American was the only airline buying the tapes of the other reservation systems.
Since not every reservation leads to an actual booking, it is important to have the
capability to combine information from various sources such as the Airline
Reporting Corporation (ARC). In the late 1980s, American analyzed this
information and made paper reports available to its divisional and regional sales
people. In 1988, American Airlines began thinking about developing a system with
The SMARTS. (Sales Management and Report Tracking System) is a
knowledge management system developed by American Airlines in
1990 as a tool to leverage CRS reservation data and American Airlines.
internal historic data on bookings and performance. It is available to
individual travel agents. SMARTS is a PC-based relational database
software application. It delivers agency-specific information on
revenue, bookings, and performance. The system is able to organize
data by city, zone, or territory of sales representatives, and has
analytical and presentation capabilities.The ability of the system to run
analysis allowed American Airlines to develop finely tailored incentive
schemes for each travel agency based upon American Airlines. These
incentive programs for individual agencies are in sharp contrast to the
industry practice of developing incentives based on a general increase
in total revenue. Deriving specific incentives to targeted travel agents
is of immense value to American Airlines as seen in the following quote
from Jack Williams, Senior Vice President of Sales,American Airlines,
“Whatever information and insights we have that can give us just a
point of share in the agency community can make a difference of
millions to our airline. So, we are talking big bucks for a small
movement of share.’’
Access to account specific information and the capability of the system to
perform additional analysis can presumably be used by the sales
representative during interactions with distribution channel managers to
persuade them to change their behaviour and to book more reservations on
that particular carrier. The main task of the sales representative is to visit
travel agencies in a territory and build a relationship that encourages the
travel agent to sell a particular airline to its clients. The system identifies
which airlines’ market share is lost and on what city-pairs. This information
then can be used to develop targeted incentive programs. Traditionally, these
sales representatives did not have much information about market share and
other performance data of the travel agencies in their territory and the job
consisted mainly of preserving a good relationship with the travel agent. To
understand the effects of such a system on the behaviour of the travel agents,
we asked travel agency managers to assess the potential benefits of such a
The following
system quote
to American comes from one of the sales representatives using the
Airlines.
system:

There were several objectives underlying to the development of the

SMARTS system. One, it is clearly a tool for influencing travel agency
booking behaviour. The system now allows the representative to analyze
market trends in more detail than anyone else could and identify
opportunities more easily than before. This is clearly an important part of
American Airlines. effort to increase each representative’s set of skills and
SMARTS is intended for use by American Airlines sales representatives as
the primary source of knowledge and expertise for use in their
interactions with independent travel agencies. The representatives saw
the potential competitive value of the system from the day the system
was introduced. As one of them indicated to us:

The system is believed to enhance American Airlines. image as a market

leader in the use of IT, which is assumed to have positive effects on the
relationship between our airline and the travel agencies. To our
knowledge, there is no other airline with a comparable system or reports
at the present time. This gives us an advantage because we have insights
on where we should increase our market share and the likely
consequences.

The system significantly changed the type of sales interactions a sales

representative has with travel agencies. Before the introduction of the
system, the representative could only maintain the relationship and
promote the airline based on general, non-targeted incentives.
Subsequently, the representative has the information to combine with
new sales tools and incentive programs based on an in-depth analysis of
the booking patterns of a particular individual travel agency in relation
The airline industry is well suited for testing our propositions for
the following reasons:

 One, the airline industry has served as an important setting for

deriving theoretical assertions and management implications of
the impact of IT on competitive characteristics, while the level of
systematic research evidence is limited.

Two, as a highly information intensive industry with strong

channel dynamics, information-based expertise and monitoring
as well as influencing capabilities are key factors.

Three, the combination of CRS and SMARTS creates the expertise

exploitation capability for American Airlines whose impact can be
systematically assessed against the access to reservation systems,
which has become market-standard for competitive parity.