Marketing Management Unit 1

7/27/2019 Marketing Management Unit 1

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MARKETING MANAGEMENT



UNDERSTANDING MARKETING MANAGEMENT

The Importance of Marketing:

• Financial success mostly depends on marketingability.

• “Marketing” happens to be a predominant factor

in the list of top business priorities of CEOs.

• It is also one among the top 10 challenges that

CEOs face. (Research year – 2006)

• It has been the Achilles’ heel of many formerly

prosperous companies (Sears, Levi’s, General

Motors, Kodak, Sony and Xerox)



The Importance of Marketing• Jack Welch, GE’s former CEO, repeatedly warned his

company: “Change or die”.

• It requires careful monitoring of customers and

competitors in order to improve their value offerings.

• It is not a short-term sales-driven view of a business.

• Skillful marketing is a never-ending pursuit.

• Success of Nirma is one of the most remarkable stories in

India’s modern business history, and Karsanbhai Patel,

who started it all, has inspired many entrepreneurs of the

country.



The Scope of Marketing

What is Marketing?

• Marketing is an organizational function and a set of

processes for creating, communicating and deliveringvalue to customers and managing customer

relationships in ways that benefit the organization and

its stakeholders.

• Marketing is about identifying and meeting humanand social needs profitably.

• Marketing Management is an art and science of

choosing target markets and getting, keeping and growing customers through creating, delivering and

communicating superior customer value.



The Scope of Marketing Managers sometimes think of marketing as “the art

of selling products,”…………………. But the startling fact is that “selling is only the tip of

the marketing iceberg”.

Peter Drucker puts it this way:

“The aim of marketing is to make selling superfluous.The aim of marketing is to know and understandthe customers so well that the product or service

fits him and sells itself.” E.g. Sony’s Play station 3 game system

Apple’s iPod Nano Digital music player

Toyota’s Prius hybrid automobile



The Scope of Marketing What Is Marketed?

Marketing people market 10 types of entities:1. Goods

2. Services

3. Events

4. Experiences5. Persons

6. Places

7. Properties8. Organizations

9. Information

10.Ideas



The Scope of Marketing 1. Goods: Physical goods constitute the bulk of most

countries’ production and marketing efforts.• Machinery tools, machines, industrial chemicals,

watches, cosmetics and other mainstays of amodern economy.

2. Services: include the work of airlines, hotels, carrental firms, barbers and beauticians,maintenance and repair people, accountants,bankers, lawyers, engineers, doctors, management

consultants etc.

• Many market offerings consist of a variable mix of goods and services.



The Scope of Marketing 3. Events: Marketers promote time-based events,

such as major trade shows, artisticperformances and company anniversaries.

• IPL is a burning example.

4. Experiences: An amusement park or a waterpark creates, stages and markets experience.

• “Theme restaurant” does the same.

5. Persons: Celebrity marketing is a majorbusiness. Artists, musicians, CEOs, physicians,high-profile lawyers and financiers, and othersget help from celebrity marketers.



The Scope of Marketing 6. Places: Cities, states, regions and whole nations

compete actively to attract tourists, factories,company H.Os and new residents.

7. Properties: Real and financial properties.

8. Organizations: actively work to create a strong,

favorable and unique image in the minds of theirtarget public.

9. Information: is essentially what books, schoolsand universities produce, market and distribute ata price.

10. Ideas: “In the factory, we make cosmetics; in thestore we sell hope,” said Charles Revson of Revlon.



The Scope of Marketing Marketers and Prospects:

A Marketer is someone who seeks a response – attention, apurchase, a vote, a donation – from another party, calledthe prospect.

Marketers are responsible for demand management.

Eight demand states are possible:

1. Negative demand2. Non-existent demand

3. Latent demand

4. Declining demand

5. Irregular demand

6. Full demand

7. Overfull demand

8. Unwholesome demand



The Scope of Marketing

MARKETPLACE: is physical, such as a store you

shop in.MARKETSPACE: is digital, as when you shop on

the internet.

METAMARKET: is a cluster of complementaryproducts and services that are closely related inthe minds of consumers, but spread across adiverse state of industries.

METAMEDIARIES: are those who assists buyers inmoving seamlessly through these groups,although they are disconnected in physicalspace.



The Scope of Marketing Marketing in Practice:

Increasingly, marketing is not done only by marketingdepartment.

To create a strong marketing organization, marketers mustthink like executives in other departments and vice versa.

Late David Packard of Hewlett-Packard observed,“Marketing is far too important to leave to the marketingdepartment”.

In practice marketing follows a logical process of:

a. Analyzing marketing opportunitiesb. Selecting target markets

c. Designing marketing strategies

d. Developing marketing programs

e. Managing the marketing effort



The Scope of Marketing There are tremendous variability in the

responsibilities and job descriptions for CMOsThey offer eight ways to improve CMO success:

i. Make the mission and responsibilities clear

ii. Fit the role to the marketing culture and structure

iii. Choose a CMO who is compatible with the CEO

iv. Remember that show people don’t succeed.

v. Match the personality with the CMO type.

vi. Make the line managers marketing heroes.

vii. Infiltrate the line organizations.

viii.Require right-brain and left-brain skills.



Core Marketing Concepts Needs are the basic human requirements.

These needs become wants when they are directedto specific objects that might satisfy the need.

Demands are wants for specific products backed by

an ability to pay.Five types of needs:

1. Stated needs

2. Real needs3. Unstated needs

4. Delight needs

5. Secret needs



Core Marketing Concepts Target Markets, Positioning and Segmentation:

As because one-size-fits-all mindset has long before becomehistory, marketers start by dividing the market into

segment.

Segmenting, therefore, is the process by which they identify

and profile distinct groups of buyers who might prefer orrequire varying product or service mixes by examining

demographic, psychographic, and behavioral differences

among buyers.

Target markets, are the market segments which present thegreatest opportunity in the light of market offering.

Positioning is securing/instilling the central benefit(s) of

market offering in the minds of the target buyers. E.g.

Volvo, Indica.



Core Marketing Concepts Offerings and Brands:

Value Proposition is a set of benefits thatcompanies offer to customers to satisfy their

needs.

The intangible value proportion is made physicalby an offering, which can be a combination of

products, services, information and experiences.

A brand is an offering from a known, and at timesrenowned, source.

A brand carries many associations in people’s

minds that make up the brand image.



Core Marketing Concepts Value and Satisfaction:

Value reflects the sum of the perceived tangible andintangible benefits and costs to customers.

It is primarily a combination of quality, service and price

(qsp) called the “customer value triad.”

Value is a central marketing concept.

Satisfaction reflects a person’s judgments of a product’s

perceived performance in relationship to

expectations. If performance falls short of expectations, the customer is dissatisfied.

If it matches expectations, the customer is satisfied.

If it exceeds them, the customer is delighted.



Core Marketing Concepts Marketing Channels

To reach a target market, the marketer uses three kinds of

marketing channels.1. Communication channels deliver and receive messages

from target buyers and include newspapers, magazines,radio, TV, mail, telephone, billboards, posters, internet etc.

2. The marketer uses distribution channels to display, sell ordeliver the physical product or services to the buyer oruser.

• They include distributors, wholesalers, retailers andagents.

3. The marketer also uses service channels to carry outtransactions with potential buyers.

• Service channels include warehouses, transportationcompanies, banks and insurance companies.



Core Marketing Concepts Supply Chain

The supply chain is a longer channel stretching from rawmaterials to components to final products that arecarried to final buyers.*

Each company captures only a certain percentage of thetotal value generated by the supply chain’s valuedelivery system.

A company makes premeditated strategic moves tocapture a higher percentage of supply chain value.

CompetitionCompetition includes all the actual and potential rival

offerings and substitutes a buyer might consider.

- Purchase of steel for cars



Core Marketing Concepts Marketing Environment

Marketing environment consists of task environment and

broad environment.

The task environment includes the actors engaged inproducing, distributing and promoting the offering.

These are the company, suppliers, distributors, dealers and

the target customers.

The broad environment consists of six components:

1. Political Environment

2. Legal Environment

3. Global Environment

4. Demographic Environment

5. Socio-cultural Environment

6. Technological Environment



Company Orientation toward the Marketplace

1. The Production Concept:

• One of the oldest concepts in business

• Consumers will prefer widely available and

inexpensive products.

• Managers concentrate on achieving high production

efficiency, low costs and mass distribution.

2. The Product concept:

• It proposes that consumers favor products that offer

the most qualitative, performance and innovativefeatures.

• Managers focus on making superior products and

improving them over time.




3. The Selling Concept:

•

Consumers and businesses, if left alone, won’t buy enough of the organization’s products.

• The organization must, therefore, undertake anaggressive selling and promotion effort.

• Sergio Zyman, Coca Cola’s former vicepresident of marketing, said: “The purpose of marketing is to sell more stuff to more people

more often for more money in order to makemore profit.”

• Practiced most aggressively with unsoughtgoods.

i i d h k l




4. The Marketing Concept:

• Emerged in the mid 1950s.

• Instead of “make-and-sell” philosophy, business

shifted to “sense and respond” philosophy.

• Focus was on finding the right products for your

customers.

• E.g. Dell Computer

5. The Holistic Marketing Concept:

• Is based on the development, design, andimplementation of marketing programs, processes

and activities that recognizes their breadth and

interdependencies.



Holistic

Marketing

Integrated

Marketing

Internal Marketing

Performance

Marketing

Relationship

Marketing

Sales revenue, Brand & customer

equity, Ethics, Environment, Legal,

Community.

Customers, Channel and

Partners

Marketing dept, Senior

mgmt, other dept.

Communications, Products &

services, channels

H li i M k i C



Holistic Marketing Concept

1. Relationship Marketing:

• Aims to build mutually satisfying long-term

relationships with key constituents in order to earnand retain their business.

• Four key constituents of relationship marketing are

customers, employees, marketing partners andmembers of the financial community.

• Ultimate outcome of relationship marketing is a

unique company asset called a marketing network.

• A marketing network consists of the company and its

supporting stakeholders.

• Another goal of relationship marketing is to place

much more emphasis on customer retention. Why?

H li i M k i C




2. Integrated Marketing:

The marketer’s task is to devise marketing activities and

assemble fully integrated marketing programs tocreate, communicate and deliver value for consumers.

McCarthy classified these activities as marketing-mixtools of four broad kinds, which he called the four Ps

of marketing:

1. Product

2. Price

3. Place4. Promotion

Marketers make marketing-mix decisions for influencingtheir trade channels as well as their final consumers.



Marketing Mix

PRODUCT:

Variety

Quality

Design

Features

Brand Name

Packaging

Sizes

Services

Warranties

Returns

PRICE:

List Price

Discounts

AllowancesPayment Period

Credit terms

PROMOTION:

Sales Promotion

Advertising

Sales ForcePublic Relations

Direct Marketing

PLACE:

Channels

Coverage

Assortments

Locations

Inventory

Transport

The four Ps represent seller’s view for influencing buyers.

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From buyer’s point of view, each marketing tool is

designed to deliver a customer benefit.

Those are (SIVA):

1. Solution: How can I solve my problem?

2. Information: Where can I learn more about it?

3. Value: What is my total sacrifice to get this solution?

4. Access: Where can I find it?

Two key themes of integrated marketing are:

1. Many different marketing activities communicate anddeliver value.

2. When coordinated, marketing activities maximize

their joint effects.

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3. Internal Marketing:

• Ensures that everyone in the organization embraces

appropriate marketing principles, especially seniormanagement.

• Internal marketing is the task of hiring, training and

motivating able employees who want to servecustomers well.

• It makes no sense to promise excellent service before

the company’s staff is ready to provide it.

• Internal marketing must take place on the followingtwo levels:

1. The various marketing functions.

2. Other departments must also “think customer”.

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Holistic Marketing Concept4. Performance Marketing:

• Connotes understanding the returns to the business

from marketing activities and programs as well asaddressing broader concerns and their effects.

• It includes:

A. Financial Accountability: aims at justifying their

investments to senior management.B. Social Responsibility Marketing: Marketers must

carefully consider their role in broader terms, and theethical, environmental, legal and social context of

their activity.• This realization calls for a new term that enlarges the

marketing concept. Its called societal marketing

concept.

TEN DEADLY SINS OF MARKETING



TEN DEADLY SINS OF MARKETING1. The company is not sufficiently market focused and customer

driven.

2. The company does not fully understand its target customers.

3. The company needs to better define and monitor itscompetitors.

4. The company has not properly managed its relationship withits stakeholders.

5. The company is at loss in finding new opportunities.6. The company’s marketing plans and planning process are

deficient.

7. The company’s product and service policies need tightening.

8. The company’s brand-building and communications skills areweak.

9. The company is not well organized to carry on effective andefficient marketing.

10. The company has not made maximum use of technology.

TEN COMMANDMENTS OF MARKETING



TEN COMMANDMENTS OF MARKETING1. The company segments the market and develops a strong

position in each chosen segment.

2. The company maps its customers’ needs, perceptions,

preferences and motivates its stakeholders for honoring them.3. The company knows its competitors well.

4. The company builds partners out of its stakeholders andgenerously rewards them.

5. The company develops systems for identifying, ranking and

choosing the best opportunities.6. The company manages a marketing planning system that leads

to insightful long-term and short-term plans.

7. The company exercises strong control over its product andservice mix.

8. The company builds strong brands cost effectively.

9. The company builds marketing leadership among its variousdepartments.

10. The company constantly adds technology that gives it a

competitive advantage in the marketplace.

PRODUCT LIFE CYCLE (PLC)



PRODUCT LIFE CYCLE (PLC)• Here, we describe the concept of the product life cycle

(PLC) and the changes that companies make as the

product passes through each stage of the life cycle.• To say that a product has a life cycle is to assert four

things:

1. Products have a limited life;

2. Product sales pass through distinct stages withdifferent challenges, opportunities, and problems forthe seller;

3. Profits rise and fall at different stages of the product

life cycle; and4. Products require different marketing, financial,

manufacturing, purchasing, and human resourcestrategies in each stage.





• Most product lifecycle curves are portrayed as a bell-

shape.

• This PLC curve is typically divided into four stages:




PRODUCT LIFE CYCLE (PLC)1. Introduction Stage:

• A period of slow sales growth as the product is introduced

in the market.• Profits are nonexistent in this stage because of the heavy

expenses incurred with product introduction.

2. Growth Stage:

•

A period of rapid market acceptance and substantial profitimprovement.

3. Maturity:

• A period of a slowdown in sales growth because the

product has achieved acceptance by most potential buyers.• Profits stabilize or decline because of increased

competition.

4. Decline:

•Sales show a downward drift and profits erode.




PRODUCT LIFE CYCLE (PLC)SUMMARY OF PLC CHARACTERISTICS, OBJECTIVES AND STRATEGIES:

Characteristics Introduction Growth Maturity Decline

Sales Low sales Rapidly rising

sales

Peak sales Declining sales

Costs High cost per

customer

Average cost per

customer

Low cost per

customer

Low cost per

customer

Profits Negative Rising profits High profits Declining profits

Customers Innovators Early adopters Middle majority Laggards

Competitors Few Growing

number

Stable number

beginning to

decline

Declining

number

Marketingobjectives

Create productawareness and

trail

Maximizemarket share

Maximize profitwhile defending

market share

Reduceexpenditure and

milk the brand

Product strategy Offer a basic

product

Offer product

extensions,

service,

warranty

Diversify brands

and items

models.

Phase out weak

products.




PRODUCT LIFE CYCLE (PLC)SUMMARY OF PLC CHARACTERISTICS, OBJECTIVES AND STRATEGIES:

Characteristics Introduction Growth Maturity Decline

Price strategy Charge cost-plus Price to

penetrate

market

Price to match

or best

competitors’

Cut price

Distribution

strategy

Build selective

distribution

Build intensive

distribution

Build more

intensive

distribution

Go selective:

phase out

unprofitableoutlets

Advertising Build product

awareness

among early

adopters anddealers

Build awareness

and interest in

the mass market

Stress brand

differences and

benefits

Reduce to level

needed to retain

hard-core loyals

Sales Promotion Use heavy sales

promotion to

entice trial

Reduce to take

advantage of

heavy consumer

demand

Increase to

encourage

brand switching

Reduce to

minimal level

Levels of Market Segmentation



Levels of Market SegmentationTo compete more effectively, many companies are

now embracing target marketing. Instead of

scattering their marketing efforts, they’re

focusing on those consumers they have the

greatest chance of satisfying.

Effective target marketing requires that marketers:

1. Identify and profile distinct group of buyers who differ in their

needs and preferences (market segmentation).

2. Select one or more market segments to enter (market

targeting).

3. For each target segment, establish and communicate the

distinctive benefit(s) of the company’s market offering (market

positioning).

Lets crystalize all the three steps in detail………..




Levels of Market Segmentation The starting point for discussing segmentation is mass marketing.

Henry Ford optimized this strategy when he offered the Model-T Ford in one

color, black.

Coca-Cola also practiced mass marketing when it sold one kind of Coke in 6.5-ounce bottle.

The argument for mass marketing is that:

i. It creates the largest potential market.

ii. Which leads to the lowest costs.

iii. Which in turn can lead to lower prices or higher margins.

However, mass marketing is failing due to splintering of the market.

Some claim that mass marketing is dying.

Most companies are turning to micromarketing at one of four levels:

i. Segments

ii. Niches

iii. Local areas

iv. Individuals





SEGMENT MARKETING:

A market segment consists of a group of customers who share a

similar set of needs and wants.

Segment marketing offers key benefits over mass marketing.

However, even a segment is partly a fiction, in that not everyone

wants exactly the same thing.

That’s why the concept of flexible market offering emerged for

catering all members of a segment.

A flexible market offering consists of two parts:

1. Naked Solution: the product and service elements that all

segment members value and

2. Discretionary options: the product and service elements that

some segment members value

Each option carries an additional charge. E.g. Domestic Airlines.





SEGMENT MARKETING:

We can characterize market segments in different ways:

1. Homogeneous preferences: exist when all consumers

have roughly the same preferences; the market shows

no natural segments.

2. Diffused preferences: Here, consumers vary greatly intheir preferences. If several brands are in the market,

they are likely to position themselves throughout the

space and show real differences to match differences

in consumer preference.

3. Clustered preferences: result when natural market

segments emerge from groups of consumers with

shared preferences.

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NICHE MARKETING:

A niche is a more narrowly defined customer group seeking adistinctive mix of benefits.

Marketers usually identify niches by dividing a segment into sub-

segments.

E.g. Ezee from Godrej, Crack from Paras Pharmaceuticals,Itchguard from Paras, Neem Active by Henkel India, Vicco

Vajradanti, Meswak and Babool.

Several TV channels today are niche focused, though the size of

the audience may be large. E.g. Aastha, QTV, STAR Cricket.

Likewise there are also magazines like better photography,

Autocar India, lifestyle etc.

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NICHE MARKETING:

What does an attractive niche look like?i. The customers have a distinct set of needs;

ii. They will pay a premium to the firm that best satisfiesthem;

iii. The niche is fairly small but has size, profit, and growthpotential and is likely to attract many other competitors

iv. And the nicher gains certain economies throughspecialization.

Larger companies like IBM have lost pieces of their market to

nichers. These confrontations have been labeled“guerrillas against gorillas.”

Some large companies have even turned to niche marketing.E.g. Hallmark.

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LOCAL MARKETING:

Marketing programs tailored to the needs and wants of localcustomer groups in trading areas, neighborhoods, even

individual stores.

E.g. specialized bank branches, “in-city” courier companies,

release of movies in different local languages are the resultof local marketing.

Local marketing reflects a growing trend called grassroots

marketing.

Marketing activities concentrate on getting as close andpersonally relevant to individual customers as possible.

Bharat Matrimony has victoriously adopted local marketing as a

key reason for its success.





INDIVIDUAL MARKETING:

The ultimate level of segmentation leads to “segments of one,” “customized marketing,” or “one-to-one marketing.”

Today consumers are taking more initiative in determining what

and how to buy.

There is a massive movement towards “customerizing” the firm.

Customerization combines operationally driven mass

customization with customized marketing in a way that

empowers consumers to design the product and service

offering of their choice.

Despite the odds of customization, it has worked well for:

Paint companies, Arvind Mills, Galleria Picture Card offered by

UBL, Pakistan.

BASES FOR SEGMENTING CONSUMER MARKET




We use two broad groups of variables to segment consumermarkets. They are:

1. Descriptive characteristics (geographic, demographic andpsychographic)

2. Behavioral considerations (consumer responses to benefits,loyalty status, readiness stage etc)

Regardless of which type of segmentation scheme we use, thekey is adjusting the marketing program to recognizecustomer differences.

The major segmentation variables are:

1. Geographic2. Demographic

3. Psychographic

4. Behavioral





Geographic Segmentation (GS):

Calls for division of the market into different geographical units

such as nations, states, regions, countries, cities orneighborhoods.

GS assumes importance due to variations in consumerpreferences and purchase habits across different regions,

countries and states.GS is done on the basis of:

1. Region: South India, Western Region, North, East.

2. City: Class-I cities, Class-II cities, metro cities, cities with a

population of 0.5 million to 1 million, cities with apopulation of over 1 million.

3. Rural and semi-urban areas: Rural villages with a populationof over 10,000; semi-urban areas; small towns with apopulation between 20,000 and 50,000.





Demographic segmentation (DS):

In DS we divide the market into groups on the basis of variables

such as:

1. Age: Under 6 years, 6-11 years, 12-19 years, 20-34 years, 35-49 years, 50-60 years, 60+ years

2. Family size: young, single; young, married, nuclear; young,

married, joint etc.3. Gender: Male, Female.

4. Income: Low (up to Rs. 40,000 p.a.), lower middle (Rs.40,001 - 80,000 p.a.) etc.

5. Occupation: Unskilled worker, skilled worker, petty traders,shop owners, businessman/industrialist, self-employed etc.

6. Education: Illiterate, school up to 4 years, school between 5and 9 years, SSC/HSC, graduate/postgraduate (general),

graduate/postgraduate (professional)





Psychographic Segmentation (PS):

Calls for division of market on the basis of:

Socio-economic classification (SEC)

Lifestyle: culture-oriented, sports-oriented, outdoor-

oriented etc.

Personality: compulsive, gregarious, authoritarian,perfectionist, ambitious etc.

Values





Behavioral Segmentation (BS):

In BS marketers divide buyers into groups on the basis of their

knowledge of, attitude toward, use of or response to a

product.

1. Decision roles

2. Behavioral variables like:I. Occasions

II. Benefits

III. User status

IV. Usage Rate

V. Buyer-Readiness stage

VI. Loyalty status

VII. Attitude

CRAFTING THE BRAND POSITIONING




Developing and Communicating a Positioning Strategy:

All marketing strategy is built on STP If a company does a poor job of positioning, the market

will be confused.

“Positioning” is the act of designing the company’s

offering and image to occupy a distinctive place in theminds of the target market.

The result of positioning is the successful creation of a

customer-focused-value proposition.

Positioning requires that similarities and differences

between brands be defined and communicated.





Competitive Frame of Reference:

A starting point in defining a competitive frame of reference fora brand positioning is to determine category membership

and nature of competition.

Category membership means the product or sets of product

with which a brand competes and which functions as closesubstitute.

Points-of-Difference and Points-of-Parity:

PODs are attributes or benefits consumers strongly associate

with a brand, positively evaluate, and believe they could notfind to the same extent with competitive brand.

POPs are associations that are not necessarily unique to the

brand but may in fact be shared with other brands.





Establishing Category Membership

Straddle Positioning: Communicating category membership by:

1. Announcing category benefits

2. Comparing to exemplars3. Relying on the product descriptor

Creating POPs and PODs

One common difficulty in creating a strong competitive

brand positioning is that many of the attributes or

benefits that make up PODs and POPs are negatively

correlated.





Differentiation Strategies:

To avoid commodity trap, marketers must start with the belief

that you can differentiate anything.

Competitive advantage is a company’s ability to perform in one

or more ways that competitors cannot or will not match.

But few competitive advantages are sustainable. At best theymay be leverageable.

Companies use the following dimensions to differentiate its

market offering:

1. Personnel differentiation2. Channel differentiation

3. Image differentiation

Documents

Marketing Management Unit 1