Marketing Management

Company Orientations and Philosophy

towards market place

• Production Concept: Prevailed during Industrial Revolution

Assumptions:

• Consumers will prefer products that are widely available and Inexpensive.
and

• Consumers are primarily interested in product availability and low prices.

• Product Concept:
Assumption:
• Consumers will favour those products that offer the most quality,
performance or innovative features .
• Selling Concept: Companies not only produce the product but also try to
convince customers to buy them.
Assumption:
• If consumers are left alone they will ordinarily not buy enough of
Organization's products.
and
• Consumer typically show buying dis-interest or resistance and must be
coaxed into buying.
• Marketing Concept: Matching a company’s capabilities with customer’s wants.

• “Make –and-sell” to “Sense-and-respond”

Assumption:

• Key to achieve its organizational goals consists of a company being more effective
than competitors.

• Customer is the King.

• You are the Boss.
• Putting people first.
• Marketing Concept contd.
Involves:
• Customer Orientation.
• Integration and unification of company operations.

• Focus:

• Customer is important.

• Profit goals will be reached through satisfied customers.

• Holistic Marketing Concept:

• Organizations keep in mind all the aspects of:

-Relationship Marketing: Building mutually satisfying long-term relationships.

-Integrated Marketing: all departments work together to serve the customers’

interest

-Internal Marketing: recruiting, motivating and retaining staff who want to

serve customers well.

-Social Responsibility: focus on delivering desired satisfaction effectively and

efficiently that competitors, at same time preserving consumers’ and society’s
well being.
Defining Marketing
• Term ‘Market’ originates from Latin Word ‘Marcatus’,
“Physical place where business is conducted”

• Has wider implications

• Customers
• Stake Holders
• Business Partners
• Competitors

• William J. stanton: A total system of interacting business activities designed to

plan, promote and distribute want-satisfying products and services.

• American Marketing Association: The performance of business activities that direct

the flow of goods and services through producers to consumers or users.
• Philip Kotler: A social and managerial process by which individuals and
groups obtain what they need and want through creating, offering
and exchanging products of value with others.

• “Marketing is a process by which companies create value for

customers and build strong Customer Relationships in order to
capture value from customers in return.”
• Marketing:
• Attempt is made to convert societal needs into profitable
opportunities.
• In the process activities involved create time, place and possession
utilities and a Value Proposition
• Sales:
• An activity which involves order taking and delivery of Products. In
the process it builds goodwill, generates Demand and does problem
solving
What is Marketing?
• Marketing is the delivery of customer satisfaction at a profit
New Economy
• Increased buying power
• Increased information
• Variety of goods
• Easy availability
• Easy order and delivery
• Easy comparison
Drivers of New Economy
• Digitalization and Connectivity
• Disintermediation and reintermediation
• Customization and customerization
• Industry convergence
M-commerce
Changing Business Practices
• Product units to customer segments
• Profitable transactions to customer life time value
• Financial scoreboard to marketing scoreboard
• Shareholders to stakeholders
• Marketing by marketing to marketing by everyone
• Building brands through advertisements to building brands thorugh
performance
• Customer acquisition to customer retention
• No understanding of customer satisfaction to in-depth customer
satisfaction
• Over promise, under deliver to under-promise and over deliver
• The new hybrid of old and past
How firms put the marketing concept into
practice?
Benefit-Value-Cost-Satisfaction -
A consumer is guided by the idea of “Utility” while making purchase
decision
-People choose those goods and services they “Value” most highly
-More is the Value-Cost gap, more is the satisfaction
• A firm satisfies the customer by offering him superior value compared
to competing offers.
• To estimate Value firms conduct buyer analysis, market research and
marketing planning and acquire the insights.
• The firm makes out the best possible assemblage of benefits as per
the customer’s expectations and offer it to the market
VALUE
• A Ratio between what a customer gets and what he gives.

• Perceived tangible and intangible benefits offered by the products /

services and its cost to the customers.
 Customer Value Triad, QSP

Quality
(Product, Features, Ingredients, Service Components)

Value

Service
Price
(After Sales, Embedded,
(Low, Competitive)
Extra Efforts)
Value = Benefits / Costs

Benefits: Functional + Emotional

Costs: Monetary + Time + Energy + Psyche

• Raise Benefits at same price

• Reduce Cost at same benefits
• Raise benefits reduce price
Marketing is not only facilitating selling of a product but also
creation of demand.

Needs: State of felt deprivation. Physical, Social and

Individual Needs.

Physical: Basic to Survival

Social: Desire to Belong
Individual: Self Expression

Wants: Needs directed towards specific satisfiers.

Shaped by one’s cultural influence, individual personality and the society.

Demand: Wants + Purchasing Power

• Marketing Myopia- Theodore Levitt
• Needs, Wants, and Demands
Needs:
• The most basic concept underlying marketing is that of human needs.
• Human needs are states of felt deprivation.
• Human have many complex needs:
• Physical needs for food, clothing, warmth, and safety
• Social needs or belonging and affection
• Individual needs for knowledge and self – expression
Wants:
• Want are the form taken by human needs as they are shaped by culture and individual personality.
• People have almost unlimited wants but limited resources.
• They want to choose products that provide the most value and satisfaction for their money.
Demands:
• When backed by buying power, wants become demands.
• Consumers view products as bundles of benefits and choose products that give them the best bundle for their money.
Marketing Mix: Vehicle for creating and
delivering customer value
1. Product: Variety, Quality, Features, Packaging, Sizes, Warranty,
Guarantee

2. Price: MRP, Discounts, Allowances, Payment Options, Credit Terms

3. Place: Channels, Coverage, Locations, Inventory, Transportation

4. Promotion: Sales Promotion, Advertising, Public Relations

5. People
Coined by Booms and Bitner, more useful for services industry .

3 Additional Tools:

5. People: All people directly involved in the

consumption of services. Consultant, Employees,
Management and Customers.

6. Process: Procedures, Mechanisms and Flow of Activities by

which services are rendered and consumed.

7. Physical Evidence: Communication, Performance and Experience of

existing customers, atmosphere etc.
• What is the best combination of all Ps in a given situation
• Which line of products or an individual product should be offered to
the identified segment
• What should be the price
• Which channel should be used to reach to the customer
• What should be the promotional strategy
• Distribution of marketing effort and resources amongst the Ps
• Maintaining balance amongst all Ps
• Optimum combination selection
• Constant Juggling
• Change in environment
• Change in customer preference
• Changes within the firm
• Marketing mix , a tool kit to deliver the intended value to the
customer.
• By adjusting any of the element of marketing mix, value can be
enhanced.
- Increased functionality of the product
- Reduced price
- Easy access
- Beneficial communication
- Better service support
• Best value-cost balance
Robert Lauterborn suggested 4 Cs

Product Customer Solution

Price Customer Cost
Place Convenience
Promotion Communication
PESTEL
SWOT
Demographic Environment
Socio-cultural Environment
Economic Environment
Political Environment
Natural Environment
Technological Environment
Legal Environment
Demographic & Socio-cultural Factors

• Age Structure (composition of population Age-wise)

• Gender Distribution
• Life Expectancy
• Population Density
• Household Size (Family Size)
• Marital Status
• Income and wealth distribution
• Employment
• Education
• Occupation
• Value System
• Consumption Patterns and attitudes
• Changing Gender Roles:
• Related to family
• Jobs
• Recreation
• Buying Behaviour

• A Premium on Time:
• Paucity of time
• Attitude towards gaining more free time
• Convenience

• Physical Fitness and Health;

Geographical Shift in Population;

Strategies: Product Development

Distribution Arrangements
Pricing Policies
Promotion
Economic Conditions:

Business Cycle
Purchasing Power of Customers
Inflation
Interest Rates

Business Cycle

Recession

Recovery

Prosperity Depression
Technology:

• Technological breakthroughs can affect markets:

• By starting new industries;

• By radically altering or virtually eliminating

existing industries;

• By stimulating markets and industries not related

to new technology;

• Accelerating pace of technological changes

Legal and Governmental Factors:

• Political Leadership

• Stability of Government

• Rules and Regulations

• Monetary and Fiscal Policies

• Patents, IPR, MRTP

Competitive Environment:
Identify Competitive Advantage
1. What is the basis of present advantage?
2. Can these advantages be sustained?

• Bargaining Power of Suppliers

• Threat of New Entrants
• Threat of Substitute
• Bargaining Power of Buyers
Marketing Process
1.Analyze and understand Markets and Prospective Customers’ needs and
wants. (Market Segmentation, Target Marketing)

2. Design a customer driven marketing strategy with the goal of acquiring,

retaining and growing target customers.
(Differentiation and Positioning; Marketing Mix)

3. Create a strategy delivering superior value.

4. Build profitable customer relationships and creating customer delight.

5. Reap the rewards.

Market Segmentation and Target Market

• Marketers can not satisfy everyone in the market.

• Marketers start by dividing the market.

• Market Segment: consists of a group of customers who share

a similar set of wants.

• Or fall into similar demographic, psychographic or behavioral

patterns.

• Target Market: Lucrative for conducting business; resources

and company objectives.
Why Segmentation?
• Facilitates proper choice of target market
• Facilitates tapping of the market, adapting the offer to the target
• Divide the markets and conquer them
• Makes marketing efforts more efficient and economic
• Helps in identifying less satisfied segments
• Benefits the customer as well
 Market Segmentation
• Geographic
• Demographic (price preference forms a major base)
• Psychographics
• Buyer behavior
• Occasions: Life events, transitions, festivals
• Benefits: people vary in the benefits they seek from the
same product
• User Status: non users, ex-users, potential users, first time Users
• Usage Rate: light, medium and heavy usage.
• Loyalty Status: Hard core, split, shifting, switchers.

Potential Market

• A company has different alternatives

Target Marketing Strategies
Mass Marketing;

A company appeals to a broad range of consumers through a single basic marketing program.

• Companies consider large potential markets.

• Assumptions;
1. People have similar characteristics and wants for a product category.

2. One Marketing Mix Strategy will satisfy them.

3. People do have different characteristics and wants but it is not worth to develop separate
marketing mix
• Pure Mass Marketing approach is dying rapidly due to….
• Intense Competition
• Much Aware Customer
• Technological Up-gradations
• Process
• Information

• Companies are turning to micro marketing by adopting different approaches based on Segmentation, Target
Identification and Positioning.

• Market Segment : consists of a group of customers who

share a similar set of wants, tastes and preferences.

A marketer does not create segment.

• Effective Segments are:

• Measurable

• Accessible

• Substantial

• Actionable

• Differentiable

• The purpose is to design a Marketing Mix that more

precisely matches the needs of individuals in a selected
market segment.
Process of Market Segmentation

• Analyze the needs of customers

• Analyze the characteristics of consumers
• Dis-integrate the viable, profitable, lucrative segments
• Formulate different market mix for different segments
• Feedback of various segments
• Select the higher potential segments
 Identifying Target Markets

Alternative Strategies

Broad Coverage
Differentiated Marketing Broad Coverage

Macro Marketing
Micro Marketing
Market Segmentation Strategies

Concentration Strategy:

A single market segment with one Marketing Mix.

Mahindra
Porsche- sports car

Segment A

Marketing Segment B
Mix

Segment C

Segment D
• Single Segment Concentration / Concentrated Strategy

• Selecting a single segment and one marketing mix.

• Choice of Smaller companies with limited resources.

• Involves risks (suddenly women stop wearing jeans).

• M1 M2 M3 M4

P1

P2

P3
Multi-segment strategy
2 or more segments are sought with a Marketing Mix for each
segment, different marketing plan for each segment

Marketing SEGMENT A
Mix A

SEGMENT B
Marketing
Mix B
SEGMENT C

Marketing SEGMENT D
Mix D
Selective Specialization Strategy / Differentiated Strategy:

• Multiple segments catered each promises to be a moneymaker.

• Helps in diversifying the risk.
• Different Marketing Mix to different segments.
• Product itself may or may not be different.
• Some of the Marketing Mix Tools may vary.
Product Specialisation:

• Company Specializing in a single product and selling it to number of

segments.
• Company builds up strong reputation
M1 M2 M3 M4

P1

P2

P3
Market Specialisation:

• Serving many needs of particular segment groups.

M1 M2 M3

• P1

• P2

• P3
 Full Market Coverage:

• A company attempts to serve the entire market,

• Single undifferentiated marketing strategy, or

• Separate marketing mix for each segment.

Attractiveness of a Market Segment
• Size of the segment
• Growth Rate of the segment
• Competition in the segment
• Brand Loyalty of existing customers
• Required market share to break even
• Whether the company can offer superior value to the
customers
• Impact of catering to the specific segment on companies
image
• Access to distribution channels
Positioning
• Positioning: is the act of designing the company’s offering
and image to occupy a distinctive place in the mind of the
target market.

• End result of positioning is the successful creation of a

customer Value Proposition.

• Product Positioning Vs. Brand Positioning.