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Marketing Management

Defining Marketing for the Twenty-First Century

The Chartered Institute of Marketing

Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably

Adcock et al

The right product, in the right place, at the right time, and at the right price

Kotler 1980
Marketing is the human activity directed at satisfying human needs and wants through an exchange process

Kotler 1991
Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others

Objectives
Understand the new economy.
Learn the tasks of marketing.

Become familiar with the major concepts and tools of marketing. Understand the orientations exhibited by companies.

Objectives
Learn how companies and marketers are responding to new challenges.

The New Economy


Consumer benefits from the digital revolution include:
Increased buying power. Greater variety of goods and services. Increased information. Enhanced shopping convenience. Greater opportunities to compare product information with others.

The New Economy


Firm benefits from the digital revolution include:
New promotional medium. Access to richer research data. Enhanced employee and customer communication. Ability to customize promotions.

Challenges of Todays Organization


Change Govt. Interference Competition Organization

Bigness

Diversification

Information
Science & Tech

Globalization

What Can Be Marketed?


Goods Services Experiences Events Persons Places Properties Organizations Information Ideas

Product
Places Goods Services

Ideas

Information

Product
Persons Properties Experiences

Events

Organizations

Marketing Defined
Kotlers Social Definition:
Marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and freely exchanging products and services of value with others.

Marketing Defined
The AMA Managerial Definition:
Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives.

Core Marketing Concepts


Target markets and market segmentation
Marketplace, marketspace, metamarkets Marketers & prospects Needs, wants, demands Product offering and brand Value and satisfaction

Exchange and transactions


Relationship and networks Marketing channels Supply chain Competition Marketing environment Marketing program

Core Marketing Concepts


Target markets & segmentation
Differences in needs, behavior, demographics or psychographics are used to identify segments. The segment served by the firm is called the target market. The market offering is customized to the needs of the target market.

Core Marketing Concepts


Needs describe basic human requirements such as food, air, water, clothing, shelter, recreation, education, and entertainment. Needs become wants when they are directed to specific objects that might satisfy the need. (Fast food)
Demands are wants for specific products backed by an ability to pay.

Core Marketing Concepts


A Product is any offering that can satisfy a need or want, while a brand is a specific offering from a known source. When offerings deliver value and satisfaction to the buyer, they are successful.

Enhancing Value
Marketers can enhance the value of an offering to the customer by:
Raising benefits. Reducing costs. Raising benefits while lowering costs. Raising benefits by more than the increase in costs. Lowering benefits by less than the reduction in costs.

Core Marketing Concepts


Exchange involves obtaining a desired product from someone by offering something in return. Five conditions must be satisfied for exchange to occur.
Transaction involves at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement.

Core Marketing Concepts


Relationship marketing aims to build long-term mutually satisfying relations with key parties, which ultimately results in marketing network between the company and its supporting stakeholders.

Core Marketing Concepts


Marketing Channels
Communication channels Distribution channels Service channels

Deliver messages to and receive messages from target buyers.


Includes traditional media, non-verbal communication, and store atmospherics.

Core Marketing Concepts


Marketing Channels
Communication channels Distribution channels Service channels

Display or deliver the physical products or services to the buyer / user.

Core Marketing Concepts


Carry out Marketing Channels transactions with potential buyers by Communication facilitating the channels transaction.
Distribution channels Service channels

Core Marketing Concepts


A supply chain stretches from raw materials to components to final products that are carried to final buyers.
Each company captures only a certain percentage of the total value generated by the supply chain.

Marketing Mix
The marketing program is developed to achieve the companys objectives. Marketing mix decisions include:
Product: provides customer solution. Price: represents the customers cost. Place: customer convenience is key. Promotion: communicates with customer.

Marketing Mix
Mkt Mix

Product

Price

Placement

Promotion

Marketing Mix
Product
Product Variety Quality Design

Price
List Price Discounts Allowances Payment Period

Promotion Place
Sales Promotion Advertising Sales Force Public Relations Publicity Channels Coverage Assortments Locations Inventory

Features Brand Name Packaging Sizes Services Warranties Returns

Transport

Competing Marketing Concepts


The orientation or philosophy of the firm typically guides marketing efforts. Several competing orientations exist:
Production concept Product concept Selling concept Marketing concept Societal marketing concept

Competing Marketing Concepts


Production Concept
Product Concept Marketing Concepts

Marketing Concept

Selling Concept

Societal Marketing

The Marketing Concept


Achieving organizational goals requires that company be more effective than competitors in creating, delivering, and communicating customer value. Four pillars of the marketing concept:
Target market Customer needs Integrated marketing Profitability

Changes in the Marketplace


Globalization, technological advances, and deregulation have created many challenges:
Customers Brand manufacturers Store-based retailers

Both companies and marketers have been forced to respond and adjust.

Levels of Competition
Four levels of competition can be distinguished by the level of product substitutability: Brand competition Industry competition Form competition Generic competition

Levels of Competition
Brand

Industry

Competition

Form

Generic

Marketing Environment
Task Environment Broad Environment

Organizations Environment
Macro or Far Environment Near or Operating Environment Customers Partners Economic Factors

Technological Factors

Clients

ORGANIZATION Suppliers Political Factors

Social Factors

Competitors

Task Environment
Company
Suppliers Distributors Dealers Target Customers Competitors

Broad Marketing Environment


The following forces in the Broad Environment have a major impact on the Task Environment:
Demographics Economics Natural environment Technological environment Political-legal environment Social-cultural environment

Demographic Environment
Population Age Mix
Population Growth

Ethnic Group
Education Status

Household Patterns

Economic Environment
Income Distribution
Subsistence Economies Raw Material Exporting Economies Industrializing Economies Industrialized Economies

Savings, Debt and Credit Availability

Natural Environment
Shortage of Raw Materials
Increased Energy Costs

Increased Pollution Levels


Changing Role of Government

Technological Environment
Accelerating Technological Change
Innovation Opportunities

Varying R&D Budgets


Regulations of Technological Change

Political-Legal Environment
Legislation Regulating Business Growth of Special Interest Groups

Social-Cultural Environment
Beliefs
Values

Norms
Subculture

SWOT Analysis
Strengths (Internal)
Weaknesses (Internal)

Opportunities (External)
Threats (External)

SWOT Analysis SWOT Analysis

Contents of the Marketing Plan


Executive Summary Current Marketing Situation Opportunity and issue analysis Objectives Marketing strategy Action programs Financial projections Implementation controls

Marketing Strategy
Segmentation Positioning Product

Management

Pricing
Distribution Marketing

Communications Marketing Research

Market Segmentation
Market Segment
It consist of a large identifiable group within a market with similar wants purchasing power, geographical location and buying attitudes or habits

Levels of Segmentation
Niche Marketing
Local Marketing

Individual Marketing

Patterns of Market Segmentation


Homogeneous Preferences
Diffused Preferences

Clustered Preferences

Market Segmentation Procedure


Survey Stage
Analysis Stage

Profiling Stage

Bases for Segmenting Market


Geographic
Demographic

Psychographics
Behavioral

Characteristics of Effective Segmentation


Measurable
Substantial

Accessible
Differentiable

Actionable

Product Positioning
It is the act of designing the companys offering and image to occupy a distinctive place in the target market

Major Positioning Errors


Under positioning
Over positioning

Confused positioning
Doubtful positioning

Differentiation
It is the act of designing a set of meaningful differences to distinguish the companys offering from competitors offerings

Dimensions/Basis of Differentiation
Product
Services

Personnel
Channel

Image

Basis of Differentiation
Product
Image

Service Channel

Personnel

Product Differentiation
Form Features Performance

Conformance
Durability Reliability Repair ability Style & Design

Product Differentiation
Form Features

Performance

Product

Conformance

Reliability

Style & Design


4-103

Service Differentiation
Ordering Ease
Delivery Installation Customer Training Customer Consulting Maintenance and Repair Miscellaneous

Service Differentiation
Ordering Ease Delivery

Customer Training

Service

Customer Consultation

Warrantee/ Guarantee

Miscellaneous
4-103

Personnel Differentiation
Competence
Courtesy

Credibility
Reliability

Responsiveness
Communication

Personnel Differentiation Differentiation Personnel


Competence Courtesy

Credibility

Personnel

Reliability

Responsiveness

Communication

4-103

Channel Differentiation
Coverage
Expertise

Performance

Channel Differentiation

Channel

Coverage

Expertise

Performance

Image Differentiation
Symbols
Media

Atmosphere
Events

Image Differentiation
Image

Symbols

Media

Atmosphere

Events

Criteria for Worthful Differentiation


Important
Distinctive Superior Communicable Pre-emptive Affordable Profitable

Product
A product is anything that can be offered to a market to satisfy a want or need. It include goods, services, experiences, events, persons, places, properties, organizations, information and Ideas.

Product Life Cycle


Introduction
Growth

Maturity
Decline

Product Levels
Core Benefit
Basic Product

Expected Product
Augmented Product

Potential Product

Product Hierarchy
Need Family
Product Family Product Class Product Line Product Type Brand Name Item

Product Classifications
Durability and Tangibility
Consumer Goods

Industrial Goods

Durability and Tangibility


Non-durable goods
Durable goods

Services

Consumer Goods Classification


Convenience goods
Shopping goods

Specialty goods
Unsought goods

Industrial Goods Classification


Materials and Parts
Capital Items

Supplies and Business Services

Product Mix
It is the set of all products and items that a particular seller offers for sale. A product mix has its
Width Length

Depth
Consistency

Product Line Decisions


Line Stretching
Down-market Stretching Up-market Stretching Two-Way Stretching

Line Filling

Line Modernization
Line Featuring & Line Pruning

Branding
Brand
It is a name, term, sign, symbol, design, or a combination of them, intended to identify the goods or services of one seller and to differentiate them from competitors

Meanings Conveyed by Brand


Attributes
Benefits

Values
Culture

Personality
User

Advantages of Branding
Easy Selling
Legal Protection

Customer Loyalty
Easy Market Segmentation

Image Building

Brand Sponsor Decision


Manufacturer Brand
Distributor Brand

Licensed Brand

Brand Name Decision


Individual Name
Blanket Family Name

Separate Family Names for all products Company Trade Name combined with Individual Product Names

Brand Strategy Decision


Line Extension
Brand Extension

Multi-brands
New Brand

Co-brands

Packaging
It includes the activities of designing and producing the container for a product

Levels of Packaging
Primary
Secondary

Shipping

Advantages of Packaging
Self Service
Consumer Affluence

Company and brand image


Innovation Opportunity

Labeling
It may be a simple tag attached to the product or an elaborately designed graphic that is part of the package

Functions of Label
Identification
Grading

Description
Promotion

Service
It is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.

Categories of Service Mix


Pure Tangible Good
Tangible Good with Accompanying Service Hybrid Major Service with Accompanying Minor Goods Pure Service

Characteristics of Services
Intangibility
Inseparability

Variability
Perishability

Elements/Tools of Service Marketing Approach


Product
Price Promotion Placement People Physical Evidence Process

Marketing Strategy for Service Firms


External Marketing
Internal Marketing

Interactive Marketing

Tasks of Service Companies


Managing Differentiation
Offer

Delivery

Image

Service Quality
Productivity

Determinants of Quality
Reliability
Responsiveness

Assurance
Empathy

Tangibles

Common Features of Excellent Service Companies


Strategic Concept
Top Management Commitment

High Standards
Monitoring Systems

Satisfying Customer Complaints


Employees Satisfaction

Designing The Pricing Strategies


Pricing Objectives
Pricing Method

Promotional Pricing
Discriminatory Pricing

Product Mix Pricing

Setting Pricing Objective


Survival
Maximum Current Profit

Maximum Market Share


Maximum Market Skimming

Product Quality Leadership

Selecting a Pricing Method


Markup Pricing
Target Return Pricing Perceived Value Pricing Value Pricing Going-rate Pricing Sealed Bid Pricing Psychological Pricing

Price Discounts and Allowances


Cash Discounts
Quantity Discounts

Functional/Trade Discounts
Seasonal Discounts

Allowances

Promotional Pricing
Loss-Leader Pricing
Special Event Pricing Cash Rebates Low Interest Financing Longer Payment Terms Warranties and Service Contracts Psychological Discounting

Discriminatory Pricing
Customer-Segment Pricing
Product-form Pricing

Image Pricing
Location Pricing

Time Pricing

Product Mix Pricing


Product Line Pricing
Optional Feature Pricing

Captive Product Pricing


Two Part Pricing

By Product Pricing
Product Bundling Pricing

Initiating and Responding to Price Changes


Initiating Price Cuts
Initiating Price Increases

Customer Reaction

Responding to Price Change


Maintain Price
Maintain Price and add Value

Reduce Price
Increase Price and Improve Quality Increase Price Launch a Low Price Item

Developing Effective Communication


Identify the Target Audience
Determine the Communication Objective Design the Message Select the Communication Channel Allocate Communication Budget

Decide Communication Mix


Measuring the Results

Marketing Communication Mix


Advertising
Sales Promotion

Public Relations
Personal Selling

Direct Marketing

Promotional Objectives
Awareness
Knowledge Liking Preference Conviction Purchase

Designing The Message


Message Content
Message Structure

Message Format
Message Source

Message Content
Rational Appeals
Emotional Appeals

Moral Appeals

Methods of Establishing Communication Budget


Affordable Method
Percentage of Sales Method

Competitive-Parity Method
Objective and Task Method

Advertising
Any paid form of non-personal presentation and promotion of ideas, goods or services by and identified sponsor

Characteristics of Advertising
Public Presentation
Pervasiveness

Amplified Expressiveness
Impersonality

Advertising Objectives
Informative Advertising
Persuasive Advertising

Reminder Advertising

Decision on Advertising Media


Reach
Frequency

Impact

Sales Promotion
A variety of short-term incentives to encourage trail or purchase of a product or service

Characteristics of Sales Promotion


Communication
Incentive

Invitation

Sales Promotion Tools


Samples
Coupons Cash Rebates Price Packs Premiums or Gifts

Prizes
Patronage Awards

Sales Promotion Tools


Free Trials
Product Warranties

Tie-in Promotions
Cross Promotions

Public Relations and Publicity


A variety of programs designed to promote or protect a companys image or its individual products

Characteristics of Public Relations and Publicity


High Credibility
Ability to catch buyers off guard

Dramatization

Functions of PR Department
Press Relations
Product Publicity

Corporate Communication
Lobbying

Counseling

Major Tools in Marketing PR


Publications
Events

News
Speeches

Public Service Activities


Identity Media

Objectives of Marketing PR
Build Awareness
Build Credibility

Stimulate the Sales Force and Dealers Hold Down Promotion Costs

Personal Selling
Face to face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions and procuring orders

Characteristics of Personal Selling


Personal Confrontation
Cultivation

Response

Tasks of Sales Force


Prospecting
Targeting Communicating Selling Servicing Information Gathering Allocating

Sales Force Structure


Territorial
Product

Market
Complex

Principles of Personal Selling


Professionalism
Negotiation

Relationship Marketing

Direct Marketing
It is an interactive marketing system that uses one or more advertising media to effect a measurable response or transaction at any time.

Characteristics of Direct Marketing


Nonpublic
Customized

Up-to-date
Interactive

Benefits of Direct Marketing


Time Saving
Easy Access to Information

Ordering Ease
Better Relationships

Less Cost

Tools of Direct Marketing


Mail
Telephone Fax E-mail Internet Catalog Marketing Telemarketing

Placement-Value Delivery Network


The network made up of the company, suppliers, distributors and ultimately customers who partner with each other to improve the performance of the entire system

Marketing Channels
A set of independent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user

Functions of Marketing Channels


Information
Promotion

Contact
Matching Negotiation Physical Distribution

Functions of Marketing Channels


Financing
Risk Taking

Channel Level
A layer of intermediaries that performs some work in bringing the product and its ownerships closer to the final buyer

Level of Channels
Direct Marketing Channels
Indirect Marketing Channels

Direct Marketing Channel


A marketing channel that has no intermediary levels, the company sells directly to consumers

Indirect Marketing Channel


A channel containing one or more intermediary levels is called indirect marketing channel

Types of Marketing Channels


Conventional Distribution Channel
Vertical Marketing System

Horizontal Marketing System


Multi-channel or Distribution System Hybrid

Conventional Marketing System


A channel consisting of one or more independent producers, wholesalers and retailers, each a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole

Vertical Marketing System


A distribution channel structure in which producers, wholesalers and retailers act as a unified system. One channel member owns the others, has contracts with them or has so much power that they all cooperate.

Types of VMS
Corporate VMS
Contractual VMS Administered VMS

Corporate VMS
A VMS that combines successive stages of production and distribution under single ownershipchannel leadership is established through common ownership

Contractual VMS
A VMS in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone

Administered VMS
A VMS that coordinates successive stages of production and distribution not through common ownership or contractual ties but through the size and power of one of the parties.

Horizontal Marketing System


A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity

Multi-channel or Hybrid Distribution System


A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments

Marketing Intermediaries Strategies


Intensive Distribution
Exclusive Distribution

Selective Distribution

Major Logistics Functions


Warehousing
Inventory Management

Transportation
Logistic Information Management

Marketing Information Systems


Marketing Research
What

is Marketing Research? Process Terminology Techniques

MKIS - Marketing Information Systems


What

is MKIS Components of an electronic MKIS

Marketing Research
The systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services American Marketing Association

The Marketing Research Process


Set objectives
Define research Problem Assess the value of the research Construct a research proposal Specify data collection method

Specify techniques of measurement


Select the sample

The Marketing Research Process


Data collection
Analysis of results

Present in a final report

Terminology of Marketing Research


Primary data - collected firsthand
Secondary data - already exists, desk research

Quantitative research - statistical basis


Qualitative research - subjective and personal sampling - studying part of a population to learn about the whole

Marketing Research Techniques


Interviews
face-to-face telephone postal

questionnaire

Attitude measurement
cognitive

component (know/believe about an act/object) affective component (feel about an act/object) co native component (behave towards an object or act)

Marketing Research Techniques


Group discussion and focus group
Postal research questionnaires Diary panels - sources of continuous data In-home scanning - hand-held light pen to scan barcodes Telephone research Observation

What is MKIS?
MKIS (MIS) is a set of procedures and methods for the regular, planned collection, analysis and presentation of information for use in marketing decisions
American Marketing Association

The Components of a Computerised MKIS


Data Bank

Statistical Bank

MKIS

Display unit

Marketing Manager

Model Bank

The Components of a Computerised MKIS


Data bank - raw data e.g historical sales data, secondary data
Statistical bank - programmes to carryout sales forecasts, spending projections A model bank - stores marketing models e.g Inventory Model, Boston Matrix Display unit - VDU and keyboard