MARKETING

MANAGEMENT
Introduction

■ One of the shortest good definitions of marketing is “meeting needs profitably.”

■ Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners,
and society at large.
■ 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 management process responsible for identifying, anticipating and satisfying
customer requirements profitably.
What Is Marketed?

■ GOODS: Physical goods such as fresh, canned, bagged, and frozen food products and
millions of cars, refrigerators, televisions, machines.
■ SERVICES: Services include the work of airlines, hotels, car rental firms, barbers and
beauticians, maintenance and repair people, and accountants, bankers, lawyers,
engineers, doctors, software programmers, and management consultants.
■ EVENTS: Marketers promote time-based events, such as major trade shows, artistic
performances, and company anniversaries. Global sporting events such as the Olympics
and the World Cup are promoted aggressively to companies and fans. Local events
include craft fairs, bookstore readings, and farmer’s markets.
■ EXPERIENCES: By orchestrating several services and goods, a firm can create, stage, and market
experiences. Walt Disney World’s Magic Kingdom lets customers visit a fairy kingdom, a pirate
ship, or a haunted house.
■ PERSONS: Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other
professionals often get help from marketers. Many athletes and entertainers have done a masterful
job of marketing themselves.
■ PLACES: Cities, states, regions, and whole nations compete to attract tourists, residents, factories,
and company headquarters. Place marketers include economic development specialists, real estate
agents, commercial banks, local business associations, and advertising and public relations agencies.
■ Properties. Properties are intangible rights of ownership of either real property (real estate) or
financial property (stocks and bonds). Properties are bought and sold, and this occasions a marketing
effort by real estate agents (for real estate) and investment companies and banks (for securities).
■ ORGANIZATIONS: Museums, performing arts organizations, corporations, and nonprofits all use
marketing to boost their public images and compete for audiences and funds.
■ INFORMATION: The production, packaging, and distribution of information is one of society’s
major industries.6 Among the marketers of information are schools and universities; publishers of
encyclopedias, nonfiction books, and specialized magazines.
Marketing Philosophies
■ The Production Concept: The production concept, one of the oldest in business, holds
that consumers prefer products that are widely available and inexpensive. Managers of
production-oriented businesses concentrate on achieving high production efficiency, low
costs, and mass distribution. It concentrates on building production volume and upgrading
technology in order to bring down costs, leading to lower prices and expansion of the
market.
■ The Product Concept: Other businesses are guided by the product concept, which holds
that consumers favor those products that offer the most quality, performance, or innovative
features. Managers in these organizations focus on making superior products and
improving them over time, assuming that buyers can appraise quality and performance.
– As many start-ups have learned the hard way, a new or improved product will not
necessarily be successful unless it’s priced, distributed, advertised, and sold properly.
■ The Selling Concept: The selling concept, another common business orientation, holds
that consumers and businesses, if left alone, will ordinarily not buy enough of the
organization’s products.
– The organization must, therefore, undertake an aggressive selling and promotion
effort.
– The selling concept is practiced most aggressively with unsought goods—goods
that buyers normally do not think of buying, such as insurance and funeral plots.
■ The Marketing Concept: The marketing concept emerged as a customer-centered
philosophy.
– The job is to find not the right customers for your products, but the right products
for your customers.
– The marketing concept holds that the key to achieving organizational goals is
being more effective than competitors in creating, delivering, and communicating
superior customer value to your target markets.
■ The Holistic Marketing concept is based on the development, design, and
implementation of marketing programs, processes, and activities that acknowledge that
everything matters in marketing—and that a broad, integrated perspective is often
necessary.
– Four broad components characterizing holistic marketing: relationship marketing,
integrated marketing, internal marketing, and performance marketing
– RELATIONSHIP MARKETING: Increasingly, a key goal of marketing is to
develop deep, enduring relationships with people and organizations that directly
or indirectly affect the success of the firm’s marketing activities.
■ It aims to build mutually satisfying long-term relationships with key constituents in
order to earn and retain their business.
■ Four key constituents for relationship marketing are customers, employees, marketing
partners (channels, suppliers, distributors, dealers, agencies), and members of the
financial community (shareholders, investors, analysts). Marketers must create
prosperity among all these constituents and balance the returns to all key stakeholders.
– The ultimate outcome of relationship marketing is a unique company asset called a
marketing network, consisting of the company and its supporting stakeholders—
customers, employees, suppliers, distributors, retailers, and others—with whom it
has built mutually profitable business relationships. The operating principle is
simple: build an effective network of relationships with key stakeholders, and
profits will follow.
– Companies are also shaping separate offers, services, and messages to individual
customers based on information about their past transactions, demographics,
psychographics, and media and distribution preferences.
– Marketing must skillfully conduct not only customer relationship management
(CRM), but partner relationship management (PRM) as well. Companies are
deepening their partnering arrangements with key suppliers and distributors,
seeing them as partners in delivering value to final customers so everybody
benefits.
■ INTEGRATED MARKETING: Integrated marketing occurs when the marketer devises
marketing activities and assembles marketing programs to create, communicate, and deliver
value for consumers such that “the whole is greater than the sum of its parts.”
– Two key themes are that (1) many different marketing activities can create, communicate,
and deliver value and (2) marketers should design and implement any one marketing
activity with all other activities in mind.
■ INTERNAL MARKETING: Internal marketing is the task of hiring, training, and motivating
able employees who want to serve customers well.
– Smart marketers recognize that marketing activities within the company can be as
important—or even more important—than those directed outside the company.
– It makes no sense to promise excellent service before the company’s staff is ready to
provide it.
– Marketing succeeds only when all departments work together to achieve customer goals:
when engineering designs the right products, finance furnishes the right amount of
funding, purchasing buys the right materials, production makes the right products in the
right time horizon, in the right ways.
■ PERFORMANCE MARKETING: Performance marketing requires understanding the
financial and nonfinancial returns to business and society from marketing activities and
programs.
– Top marketers are increasingly going beyond sales revenue to examine the
marketing scorecard and interpret what is happening to market share, customer
loss rate, customer satisfaction, product quality, and other measures.
– Marketers are also considering the legal, ethical, social, and environmental effects
of marketing activities and programs.
A Dramatically changed marketplace

■ Consumers can use the Internet as a powerful information and purchasing aid
■ Consumers can search, communicate, and purchase on the move
■ Consumers can tap into social media to share opinions and express loyalty
■ Consumers can actively interact with companies
■ Companies can use the Internet as a powerful information and sales channel, including for
individually differentiated goods
■ Companies an collect fuller and richer information about markets, customers, prospects, and
competitors
■ Companies can reach customers quickly and efficiently via social media and mobile marketing,
sending targeted ads, coupons, and information
■ Companies can improve cost efficiency
Steps in the Marketing Process

■ The marketing process consists of analyzing market opportunities, researching and

selecting target markets, designing marketing strategies, planning marketing programs, and
organizing, implementing, and controlling the marketing effort.
1. Analyzing market opportunities. The marketer’s initial task is to identify potential long
run opportunities given the company’s market experience and core competencies.
– To evaluate its various opportunities, assess buyer wants and needs, and gauge
market size, the firm needs a marketing research and information system.
– Next, the firm studies consumer markets or business markets to find out about buying
behavior, perceptions, wants, and needs.
– Smart firms also pay close attention to competitors and look for major segments
within each market that they can profitably serve.
2. Developing marketing strategies. In this step, the marketer prepares a positioning strategy for
each new and existing product’s progress through the life cycle, makes decisions about product
lines and branding, and designs and markets its services.
3. Planning marketing programs. To transform marketing strategy into marketing programs,
marketing managers must make basic decisions on marketing expenditures, marketing mix, and
marketing allocation.
– The first decision is about the level of marketing expenditures needed to achieve the
firm’s marketing objectives.
– The second decision is how to divide the total marketing budget among the various tools
in the marketing mix: product, price, place, and promotion.
– And the third decision is how to allocate the marketing budget to the various products,
channels, promotion media, and sales areas.
4. Managing the marketing effort. In this step, marketers organize the firm’s marketing resources
to implement and control the marketing plan. Because of surprises and disappointments as
marketing plans are implemented, the company also needs feedback and control.
Marketing Mix

■ Marketing mix is the set of marketing tools that the firm uses to pursue its marketing
objectives in the target market.
■ McCarthy classified various marketing activities into marketing-mix tools of four broad
kinds, which he called the 4 Ps of marketing mix : product, price, place, and promotion.
■ Traditionally, there were 4Ps — Product, Price, Place and Promotion. As marketing
became a more sophisticated discipline, a fifth ‘P’ was added — People. More recently,
two further ‘P’s were added — Process and Physical evidence.
■ Product: There is no point in developing a product or service that no one wants to buy, yet
many businesses decide what to offer first, then hope to find a market for it afterwards.
Successful companies find out what customers need or want and then develop the right
product with the right level of quality to meet their expectations, both now and in the future.
– A product does not have to be tangible – an insurance policy can be a product.
■ Price: A product is only worth what customers are prepared to pay for it. The price needs to
be competitive, but this doesn’t mean you have to be the cheapest in your market – small
businesses can compete with larger rivals by offering a more personal service, value-adds or
better value for money.
– Companies also need to make a profit. Pricing is the only element of the marketing
mix that generates revenue — everything else represents a cost to you.
– Price positions companies in the marketplace — it tells customers where to place them
in relation to their competitors.
– The more companies charge, the more value or quality their customers will expect for
their money.
■ Place: The product must be available in the right place, at the right time and in the right
quantity, while keeping storage, inventory and distribution costs to an acceptable level.
– The place where customers buy a product, and the means of distributing product to that
place, must be appropriate and convenient for the customer.
– E-commerce operations that sell exclusively on the internet must place even more
emphasis on the company website and other online activities.
– Mobile is an increasingly important purchasing channel for consumers, so it may be a
good time to optimise your website.
■ Promotion: Promotion is the way a company communicates what it does and what it can offer
customers.
– It includes branding, advertising, PR, corporate identity, social media outreach, sales
management, special offers and exhibitions.
– Promotion must gain attention, be appealing, send a consistent message and - above all -
give the customer a reason to choose your product rather than someone else’s.
– Promotion should communicate the benefits that a customer receives from a product, not
just its features.
– Explore new channels – from traditional print ads to the latest social media trends, there is
now a world of possibilities to explore. The important principle is to always advertise
where your target consumer goes
■ People: Everyone who comes into contact with customers will make an impression.
– Many customers cannot separate the product or service from the staff member who
provides it, so people will have a profound effect — positive or negative — on
customer satisfaction.
– The reputation of brand rests in the hands of company’s staff. They must be
appropriately trained, well-motivated and have the right attitude.
– All employees who have contact with customers should be well-suited to the role.
– Superior after sales support and advice adds value to brand’s offering, and can
give you a competitive edge. These services will probably become more important
than price for many customers over time.
■ Process: Many customers no longer simply buy a product or service - they invest in an
entire experience that starts from the moment they discover your company and lasts
through to purchase and beyond.
– That means the process of delivering the product or service, and the behaviour of
those who deliver it, are crucial to customer satisfaction. A user-friendly internet
experience, waiting times, the information given to customers and the helpfulness
of staff are vital to keep customers happy
■ Physical evidence: A clean, tidy and well-decorated reception area – or homepage - is
reassuring. If your digital or physical premises aren’t up to mark, why would the
customer think your service is?
Marketing Research

■ Marketing research is the function that links the consumer, customer, and public to the
marketer through information—information used to identify and define marketing
opportunities and problems; generate, refine, and evaluate marketing actions; monitor
marketing performance; and improve understanding of marketing as a process.
■ Marketing research specifies the information required to address these issues, designs
the method for collecting information, manages and implements the data collection
process, analyzes the results, and communicates the findings and their implications.
■ Marketing research is the systematic design, collection, analysis, and reporting of data
and findings relevant to a specific marketing situation facing the company.
The Marketing Research Process

Step 1: Define the Problem and Research Objective

■ Problem definition involves stating the general problem and identifying the specific components
of the marketing research problem. Only when the marketing research problem has been clearly
defined can research be designed and conducted properly.
■ The marketing decision problem is translated into a marketing research problem.
■ The marketing decision problem is action oriented. It is concerned with the possible actions the
decision-maker can take. How should the loss of market share be handled? Should the market
be segmented differently? Should a new product be introduced? Should the promotional budget
be increased?
■ In contrast, the marketing research problem is information oriented. It involves determining
what information is needed and how that information can be obtained effectively and efficiently.
■ The general rule to be followed in defining the research problem is that the definition should:
1) allow the researcher to obtain all the information needed to address the marketing decision
problem;
2) guide the researcher in maintaining focus and proceeding with the project in a consistent
manner.
■ Researchers make two common errors in problem definition.
– The first arises when the research problem is defined too broadly. A broad definition does not
provide clear guidelines for the subsequent steps involved in the project. Some examples of
excessively broad marketing research problem definitions are: developing a marketing strategy
for a brand, improving the competitive position of the firm, or improving the company’s image.
– The second type of error is just the opposite: the marketing research problem is defined too
narrowly. It may also prevent the researcher from addressing important components of the
marketing decision problem. For example, in a project conducted for a consumer products
firm, the marketing problem was how to respond to a price cut initiated by a competitor.
– The problem should be redefined as improving the market share and profitability of the product
line.
■ The likelihood of committing either error of problem definition can be reduced by
stating the marketing research problem in broad, general terms and identifying its
specific components
– The broad statement of the problem provides perspective and acts as a safeguard
against committing the second type of error.
– The specific components of the problem focus on the key aspects and provide clear
guidelines on how to proceed further, and act as a safeguard against committing
the first type of error.
Step 2: Develop the Research Plan
■ Designing a research plan calls for decisions on the data sources, research approaches,
research instruments and sampling plan.
■ Data Sources. The researcher can gather secondary data, primary data, or both.
– Secondary data are data that were collected for another purpose and already exist
somewhere.
– Primary data are data gathered for a specific purpose or for a specific research
project.
■ Research Approaches. Primary data can be collected in five ways: observation, focus
groups, surveys, behavioral data, and experiments.
– Observational research: Fresh data can be gathered by observing the relevant
actors and settings.
– Focus-group research: A focus group is a gathering of six to ten people who are
invited to spend a few hours with a skilled moderator to discuss a product, service,
organization, or other marketing entity.
– Survey research: Surveys are best suited for descriptive research. Companies
undertake surveys to learn about people’s knowledge, beliefs, preferences, and
satisfaction, and to measure these magnitudes in the general population.
– Behavioral data: Customers leave traces of their purchasing behavior in store
scanning data, catalog purchase records, and customer databases. Much can be
learned by analyzing this data. Customers’ actual purchases reflect revealed
preferences and often are more reliable than statements they offer to market
researchers.
– Experimental research: The most scientifically valid research is experimental
research. It calls for selecting matched groups of subjects, subjecting them to
different treatments, controlling extraneous variables, and checking whether
observed response differences are statistically significant.
■ Research Instruments. Marketing researchers have a choice of two main research instruments in
collecting primary data: questionnaires and mechanical devices.
– Questionnaires: A questionnaire consists of a set of questions presented to respondents for
their answers. Because of its flexibility, the questionnaire is by far the most common
instrument used to collect primary data.
■ Questionnaires need to be carefully developed, tested, and debugged before they are administered
on a large scale.
■ In preparing a questionnaire, the professional marketing researcher carefully chooses the
questions and their form, wording, and sequence.
■ Marketing researchers distinguish between closed-end and open-end questions.
■ Closed-end questions prespecify all the possible answers.
■ Open-end questions allow respondents to answer in their own words.
■ Closed-end questions provide answers that are easier to interpret and tabulate. Open-end questions
often reveal more because they do not constrain respondents’ answers.
■ Open-end questions are especially useful in exploratory research, where the researcher is looking
for insight into how people think rather than in measuring how many people think a certain way
– Mechanical Instruments: Mechanical devices are occasionally used in marketing research.
Galvanometers measure the interest or emotions aroused by exposure to a specific ad or
picture.
■ Sampling Plan. After deciding on the research approach and instruments, the marketing
researcher must design a sampling plan.
– This plan calls for three decisions:
1. Sampling unit: Who is to be surveyed? The marketing researcher must define the
target population that will be sampled.
2. Sample size: How many people should be surveyed? Large samples give more
reliable results than small samples.
3. Sampling procedure: How should the respondents be chosen? Probability or Non-
Probability sampling.
– Non-probability sampling: Sampling techniques that do not use chance selection
procedures but rather rely on the personal judgement of the researcher.
– Probability sampling: A sampling procedure in which each element of the
population has a fixed probabilistic chance of being selected for the sample
Step 3: Collect the Information: The data collection phase of marketing research is generally the
most expensive and the most prone to error.
Step 4: Analyze the Information: The next-to-last step in the marketing research process is to extract
findings from the collected data.
– The researcher tabulates the data and develops frequency distributions. Averages and
measures of dispersion are computed for the major variables.
– The researcher will also apply some advanced statistical techniques and decision models in
the hope of discovering additional findings.
Step 5: Present the Findings As the last step, the researcher presents the findings to the relevant
parties.
■ The entire project should be documented in a written report that addresses the specific research
questions identified, describes the approach, research design, data collection and data analysis
procedures adopted, and presents the results and major findings.
■ Research findings should be presented in a comprehensible format so that they can be readily used
in the decision-making process
Marketing Strategy

marketing strategy decisions —

■ dividing up markets into meaningful customer groups (segmentation),
■ choosing which customer groups to serve (targeting),
■ creating market offerings that best serve targeted customers (differentiation),
■ positioning the offerings in the minds of consumers (positioning).
■ Market segmentation, targeting, and positioning are known as the “STP” of marketing.
Market Segmentation

■ The process of dividing a market into distinct groups of buyers who have different
needs, characteristics, or behaviors, and who might require separate products or
marketing programs, is called market segmentation.
■ Market Segment: A group of consumers who respond in a similar way to a given set of
marketing efforts.
Basis for Segmentation

■ Marketers can apply geographic, demographic, and psychographic variables related to

consumer characteristics as well as behavioral variables related to consumer responses.
■ Geographic Segmentation: Geographic segmentation calls for dividing the market into
different geographical units such as nations, states, regions, counties, cities, or
neighborhoods. The company can operate in one or a few geographic areas or operate in
all but pay attention to local variations.
■ Demographic Segmentation In demographic segmentation, the market is divided into
groups on the basis of age, gender, income, education, occupation, family size etc.
– One reason this is the most popular consumer segmentation method is that consumer
wants, preferences, and usage rates are often associated with demographic variables.
■ Psychographic Segmentation: In psychographic segmentation, buyers are divided into different groups
on the basis of lifestyle or personality and values.
– Personality. Marketers can endow their products with brand personalities that correspond to
consumer personalities. Apple Computer’s iMac computers, for example, have a friendly, stylish
personality that appeals to buyers who do not want boring, ordinary personal computers.
■ Behavioral Segmentation: In behavioral segmentation, buyers are divided into groups on the basis of
their knowledge of, attitude toward, use of, or response to a product. Many marketers believe that
behavioral variables—occasions, benefits, user status, usage rate, loyalty status, buyer-readiness stage,
and attitude—are the best starting points for constructing market segments.
– Occasions. Buyers can be distinguished according to the occasions on which they develop a need,
purchase a product, or use a product.
– Benefits. Buyers can be classified according to the benefits they seek.
– User status. Markets can be segmented into nonusers, ex-users, potential users, first time users,
and regular users of a product.
– Usage rate. Markets can be segmented into light, medium, and heavy product users.
– Loyalty status. Buyers can be divided into four groups according to brand loyalty status: (1) hard-
core loyals (who always buy one brand), (2) split loyals (who are loyal to two or three brands), (3)
shifting loyals (who shift from one brand to another, and (4) switchers (who show no loyalty to any
brand).
– Attitude. Five attitude groups can be found in a market: (1) enthusiastic, (2) positive, (3)
indifferent, (4) negative, and (5) hostile
Requirements for Effective segmentation

➤ Measurable: The size, purchasing power, and characteristics of the segments can be
measured.
➤ Substantial: The segments are large and profitable enough to serve. A segment should be
the largest possible homogeneous group worth going after with a tailored marketing
program.
➤ Accessible: The segments can be effectively reached and served.
➤ Differentiable: The segments are conceptually distinguishable and respond differently to
different marketing mixes. If two segments respond identically to a particular offer, they do
not constitute separate segments.
➤ Actionable: Effective programs can be formulated for attracting and serving the segments
Market Targeting

■ The process of evaluating each market segment’s attractiveness and selecting one or more
segments to enter.
■ Evaluating market Segments: segment size and growth, segment attractiveness, and
company objectives and resources.
■ Selecting and Entering Market Segments
– Single-Segment Concentration: Many companies concentrate on a single segment:
Through concentrated marketing, the firm gains a thorough understanding of the
segment’s needs and achieves a strong market presence.
■ Furthermore, the firm enjoys operating economies by specializing its production,
distribution, and promotion; if it attains segment leadership, it can earn a high return on
its investment.
■ Selective Specialization: Here the firm selects a number of segments, each objectively
attractive and appropriate.
– There may be little or no synergy among the segments, but each segment promises
to be a moneymaker. This multi-segment coverage strategy has the advantage of
diversifying the firm’s risk.
■ Product Specialization: Another approach is to specialize in making a certain product
for several segments. An example would be a microscope manufacturer that sells
microscopes to university laboratories, government laboratories, and commercial
laboratories. The firm makes different microscopes for different customer groups but
does not manufacture other instruments that laboratories might use.
■ Market Specialization: With market specialization, the firm concentrates on serving
many needs of a particular customer group. An example would be a firm that sells an
assortment of products only to university laboratories, including microscopes,
oscilloscopes, and chemical flasks
■ Undifferentiated Marketing: Using an undifferentiated marketing (or mass marketing)
strategy, a firm might decide to ignore market segment differences and target the whole
market with one offer. Such a strategy focuses on what is common in the needs of
consumers rather than on what is different.
■ Differentiated (segmented) marketing: A market-coverage strategy in which a firm
decides to target several market segments and designs separate offers for each.
■ Individual marketing: The ultimate level of segmentation leads to “segments of one,”
“customized marketing,” or “one-to-one marketing.”
– As companies have grown proficient at gathering information about individual
customers and business partners (suppliers, distributors, retailers), and as their
factories are being designed more flexibly, they have increased their ability to
individualize market offerings, messages, and media.
– Mass Customization is the ability of a company to meet each customer’s requirements
—to prepare on a mass basis individually designed products, services, programs, and
communications.