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MB0046Marketing Management
Q.1 What is Marketing Information System? Explain its
characteristics,
benef its andinformation types ?
Ans. A Marketing Information System can be defined as a system
in which
marketinginformation is formally gathered, stored, analysed and
distributed tomanagers in accord withtheir informational needs on a
regular basis.Set
of procedures and practices employedin analyzing an
assessing marketing information, gathered
continuouslyfromsources insideand outsideof afirm. Timely marketing
information
providesbasis for decisionssuch as product
developmentor improvement, pricing, packaging,distribution,
media selection,and promotion.
Characteristics of MIS
Philip Kotler defines MIS as a system that consists of people,
equipment and
procedures togather,sort, analyze, evaluate and distribute
needed, timely andaccurate information to
marketingdecisionmakers.Its characteristics are as follows:1. It is
a
planned system developed to facilitate smooth and continuous
flow of information.2. Itprovides pertinent information, collected
from sources both internal and external to
thecompany, for use as the basis of marketing decision making.3.
It provides right information at
the right time to the right person.A well designed MIS serves as
a companys nerve centre,continuously monitoring the
marketenvironment both inside and outside the
organization. In the process, it collects lot of data and
storesin the form of a database which is maintained in an
organized manner. Marketers classify
andanalyze this data from the database as needed.Benefits of
MIS(Marketing Information System)
Various benefits of having a MIS and resultant flow of marketing
information are given below:
1. It allows marketing managers to carry out their analysis,
planning implementation andcontrolresponsibilities more
effectively.2. It ensures effective tapping of marketing
opportunities
and enables the company to developeffective safeguard against
emerging marketing threats.3. It
provides marketing intelligence to the firm and helps in early
spotting of changing trends.4. It
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helps the firm adapt its products and services to the needs and
tastes of the customers.5. By
providing quality marketing information to the decision maker,
MIS helps in improving the
quality of decision making.Types of Marketing Information
A Marketing Information System supplies three types of
information.1.
Recurrent Information
i s the da ta tha t MIS supp l ies pe r i od ica l ly a t a week
ly , mont h ly , quarterly,o rannual interval. This includes data
such as sales, Market Share, sales call reports,
i nv ent or yl e v e l s , p a y a b l e s , a n d r e c e i v a
b l e s e t c . w h i c h a r e m a d e a v a i l a b l e
r e g u l a r l y . I n f o r m a t i o n o n c u s t o m e r a
w a r e n e s s o f c o m p a n y s b r a n d s ,ad ve rt is in g
ca mp ai gn s an d si mi la r da ta on cl os e competitors can also
be
provided.2.
Monitoring Information
is the data obtained from regular scanning of certain sources
such astrade journals and otherpublications. Here relevant data
from external environment is capturedto monitor changes and
trends related to marketing situation. Data about competitors
can also be part of this
category. Some of these data can be purchased at a price from
commercialsourcessuch as Market Research agencies or from
Government sources.3.
Problem related or customized information
i s d e v e l o p e d i n r e s p o n s e t o s o m e s p e c i
f i c r e q u i r e m e n t r e l a t e d t o amarke t ing p rob
lem or any pa r t i cu la r da ta reques ted by a manager .P r
imary
Data or Secondary Data (or both) are collected through survey
Research in response tospecific
need. For example, if the company has developed a new product,
the marketing manager may
want to find out the opinion of the target customers before
launching the productin themarket. Such data is generated by
conducting a market research study with adequate
sample size,and the fin dings ob tained are us ed to help d
ecide whether the p roduct is
accepted and can belaunched.
Q.2 a. Examine how a firms macro environment operates.b. Mention
the key points in Psychoanalytic model ofconsumer behaviour.
Ans.
The term micro-environment denotes those elements over which the
marketing
firm hascontrol or which it can use in order to gain information
that will betterhelp i t in i ts market ingoper a t io ns . In o
the r word s , thes e a re e lem ents tha t
c a n b e m a n i p u l a t e d , o r u s e d t o gl e a n
information, in order to provide fuller
satisfaction to the companys customers. The objective
ofmarketing philosophy is to makeprofi ts through sati sfying
customers . This is accomp lish ed through the manipulation of
the variables over which a company has control in such a way as
toopt imise th is ob ject iv e.
The variables are what Neil Borden has termed the marketing mix
wh i c h i s ac o m b i n a t i o n o f a l l t h e i n g r e d i e
n t s i n a r e c i p e t h a t i s d e s i g n e d t op ro ve mo s
t attractive to customers. In this case the ingredients are
individual
elements that marketing canmanipulate into the most appropriate
mix. E Jerome McCarthy
further dubbed the variables thatt h e co mp an y ca n co nt r
ol in or de r t o r ea ch i t s
t a r g e t m a r k e t t h e f o u r P s . E a c h o f t h e s
e i s d i s c u s s e d i n d e t a i l i n l a t e r c h a p t e r
s , b u t a b r i e f d i s c u s s i o n n o w f o l l o ws u p o
n e a c h o f t h e s e el ement s
of the marketing mix together with an explanation of how they
fit into the
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overal lnotion of marketing.A scan of the external
macro-environment in which the firm
operates can be expressed in termsof the following factors:
Political
Economic
Social
TechnologicalThe acronym
PEST
(or sometimes rearranged as STEP) is used to describe a
framework for t h ea n a l y s i s o f t h e s e m a c r o e n v i
r o n m e n t a l f a c t o r s . A P E S T a n a l y s i s
f i t s i n t o a n o v e r a l l environmental scan as shown in
the following diagram:
Environmental Scan/\E x t e r n a lA n a l y s i s I n t e r n a
l
A n a l y s i s /
\
Macroenvironment Microenvironment|
P.E.S.T.
Political FactorsPolitical factors include government
regulations and legal issues and define both
formal andinformal rules under which the firm must operate. Some
examples include:
tax policy
employment laws
environmental regulations
trade restrictions and tariffs
political stability
Economic Factors
Economic factors affect the purchasing power of potential
customers and the
firms cost ofcapital. The following are examples of factors in
the macroeconomy:
economic growth
interest rates
exchange rates
inflation rateSocial Factors
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Social factors include the demographic and cultural aspects of
the external macro
environment .These fac tors af fec t cus tomer needs and the s
ize of potent ia lmar ket s . Som e s oci a l fac to rs
include:
health consciousness
population growth rate
age distribution
career attitudes
emphasis on safety
Technological Factors
Technological factors can lower barriers to entry, reduce
minimum efficient
producti on level s, and influence outsourcing decisions. Some
technological factors include:
R&D activity
automation
technology incentives
rate of technological change
External Opportunities and Threats
The PEST factors combined with external micro environmental
factors can be
classified asopportunities and threats in aSWOT analysis.
The Psychoanalytical Model:The psychoanalytical model draws from
Freudian Psychology.According to this model, the
individual consumer has a complex set of deep-seated
motiveswhich drive him
towards certain buying decisions. The buyer has a private world
with allh is h i d d e n f e a r s , s u p p r e s s e d d e s i r
e s a n d t o t a l l y s u b j e c t i v e l o n g i n g s . Hi
s
b u yi n g a c t i o n c a n b e influenced by appealing to
these desires and longings. The
psychoanalytical theory is attributedt o t h e w o r k o f e m i
n e n t p s y c h o l o g i s tS i g m u n d F r e u d . F r e u d
i n t r o d u c e d p e r s o n a l i t y a s a motivating force
in
human behavior.
According to this theory, the mental framework of a human being
is composed of threeelements,namely,1.
T h e i d
o r t h e i n s t i n c t i v e , p l e a s u r e s e e k i n g
e l e m e n t . I t i s t h e r e s e r v o i r o f t h e
i n s t i n c t i v e impulses that a man is born with and whose
processes are entirely subconscious. Itincludes theaggressive,
destructive and sexual impulses of man.2.
The superego
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or the internal filter that presents to the individual the
behavioral expectations of soci et y. It
develops out of the id, dominates theego
and represents the inhibitions of instinctwhich is
characteristic of man. It represents the
moral and ethical elements, the
conscience.3.
The ego
or the control device that maintains a balance between the id
and the superego. Itisthe most superficial portion of the
id.
It is modified by the influence of the outside world. Its
processes are entirely conscious because it is concerned with
the perception of the outside
world.The basic theme of the theory is the belief that a person
is unable to satisfy all his needswithinthe bounds of society.
Consequently, such unsatisfied needs create tension within an
individualwhich hav e to be repres sed. Su ch repres sed ten
sion is always s aid to exist
in the subconsciousand continues to influence consumer
behavior.4.The Sociological Model:
Ac c o r d i n g t o t h e s o c i o l o g i c a l m o d e l , t
h e i n d i v i d u a l b u y e r i s i nfl uenced b y
society or intimate groups as well as social classes. His buying
decisions are
nottotally governed by utility He has a desire to emulate,
follow and fit in withhis immediate environment.
5. The Nicosia Model
: In recent years, some efforts have been made by marketing
scholars to build
buye r behavio r models tota lly from the marketin g mans st
andpoint. The Nicosiamo del a n d t h e Ho wa r d a n d S h e t h m
o d e l a r e t wo i m p o r t a n t m o d e l s i n t h i s
c a t e g o r y . B o t h o f t h e m belong to the category
called the systems model, where the
human being is analyzed as a systemw i t h st im ul i as t h e i
np ut t o th e s ys t em a ndbe ha vi or as th e ou tp ut of th e s
ys te m. Fr an ce sc o Nicosia, an expert in consumer
motivation and behavior put forward his model of buyer behavior
in 1966.The model tries to
establish the linkages between a firm and its consumerhow the
activities of th e fi rminfluence the consumer and result in his
decision to buy. The messages from the
f ir mf i r s t i n f l u e n c e t h e p r e d i s p o s i t i
o n o f t h e c o n s u m e r t o wa r d s t h e
p r o d u c t . De p e n d i n g o n t h e s i t u a t i o n , h
e d e v e l o p s a c e r t a i n a t t i t u d etow ards t he p r
oduc t . I t m ay lea d to a sea r ch fo r the p roduct o r an
evaluation of the product. If these steps have a positive impact
on him, it
mayresult in a decision to buy. This is the sum and substance of
the activity
explanations in the Nicosia Model. The Nicosia Model group s t
hese activiti es into
four basic fields. Field one has two subfields the firms
attributes and the consumersattributes. An advertising message from
the firm reaches theconsumers attributes. Depending on
the way the message is received by the consumer, a
certainattribute may develop, and thisbecomes the input for Field
Two. Field Two is the area of searchan d e v a l u a t i o n o f t
h e
a d v e r t i s e d p r o d u c t a n d o t h e r a l t e r n a
t i v e s . I f t h i s p r o c e s s r e s u l t s i n a
m o t i v a t i o n t o b u y , i t b e c o m e s t h e i n p u
t f o r F i e l d T h r e e . F i e l d T h r e e
c o n s i s t s o f t h e a c t o f purchase. And Field Four
consists of the use of the purchased item.
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Q.3 Explain the key roles played and various steps involved in
organizational buying.
Ans. Point 1Introduction.The need for an understanding of the
organizational buyingprocess has grown in recent yearsdue to the
many competitive challenges
presented in business-to-business markets. Since 1980there have
been a number
ofkey changes in this area, including the growth of outsourcing,
theincreasing
power enjoyed by purchasing departments and the importance given
todeveloping partnerships with suppliers.Point 2 The organizational
buying behaviour
process.The organizational buying beh aviour p rocess is well do
cumented with man y
models depictingthe various phases, the members involved, and
the decisions made in eachphase. The basic five p h a s e m o d e l
c a n b e e x t e n d e d t o e i gh t p u r c h a s ei n it i a ti
o n e v a lu a t io n s c ri t e r i a fo rm a ti o n information
search supplier definition for
RFQ evaluation of quotations negotiations supplierschoice and
choice implementation(Matbuy, 1986).Point 3 The buying centre. The
buying centre consists of those
people in the organizationalwho are involved directly or
indirectly in the buying
process, i.e. the user, buyer influencer,decider and gatekeeper
to who the role of
initiator has also been added. The buyers in the process are
subject to a wide
variety and complexity of buying motives and rules of
selection.The Matbuy modelencourages marketers to focus their
efforts on
whois making
what decisions
based onwhich criteria
.Point 4Risk and uncertainty
The driving forces of organizational buying behaviour. This is
concerned with the role of risk
or uncertainty on buying behaviour. The level of risk depends
upon the characteristics of the
buyingsituation faced. The supplier can influence the degree of
perceived uncertainty by the
buyer andcause certain desired behavioural reactions by the use
of information and theimplementation of certainactions. The risks
perceived by the customer can result from a
combination of the characteristicsof various factors: the
transaction involved, the
relationship with the supplier, and his posi tionvis-a-vis the
supply market.Point 5Factors influencing organizational buying
behaviour.Three key factors are shown to
influence organizational bu ying be haviour, these are, types of
buying situations and
situational factors, geographical and cultural factors and time
factors.
Point 6Purchasing Strategy.The purchasing function is of great
importance becauseits actions will impact directly on
theorganizations profitability. Purchasing strategy aimsto evaluate
and classify the various items purchased in order to be able to
choose and manage
suppliers accordingly. Classification is alongtwo dimensions:
importance of items purchased andcharacteristics of the supply
market. Actionscan be taken to influ ence the suppl y market .Based
on the type of items purchased and on its position in the buying
matrix, a
company will develop different relationships with suppliersd ep
en di ng up on th e
number o f supp l ie r s , th e s upp l i e r s s ha r e , cha r
ac t e r i s t i c s o f
selectedsuppliers, and the nature of customer-supplier
relationships. The degree of
centralization of
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buying activities and the missions and status of the buying
function can help support
purchasingstrategy. The company will adapt its procedures to the
type of items purchased whichin turn willinfluence relationships
with suppliers. Point 7 The future.Two activities
wh i c h wi l l b e c r u c i a l t o t h e f u t u r e d e v e
l o p m e n t o f o r g a n i z a t i o n a l
b u yi n g behaviour will be information technology and
production technologies.Point 8
Conclusion.Organizational buying behaviour is a very complex
area, however, anunderstanding of the keyfactors are fundamental to
marketing strategy and thus an
organizations ability to competeeffectively in the market
place.
Q.4 Explain the different marketing philosophies and its
approach.
Ans. 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. According to the American
Marketing Association,
Marketing is the process of plannin g and executing the
conception, pricing,
promotion and distribution of ideas, goods and services to
create exchanges that
satisfy individual and organizational goods There are six
competing philosophies
under which organizations conduct marketing activities the
production concept,
product concept, selling concept, marketing concept, customer
concept and
societal concept.
1) The Production Concept: The production concept is one of the
oldest concepts
in business. The production concept holds that consumers will
prefer products that
are widely available and inexpensive. Managers of
production-oriented businesses
concentrate on achieving high production efficiency, low costs
and mass
distribution. They assume that consumers are primarily
interested in products
availability and low prices. This philos ophy makes sense in
developing countries,
where consumers are more interested in the desired satisfactions
more effectively
and efficiently than competitors in a way that preserves or
enhances the
consumers and the societys well being. The societal marketing
concept calls
upon marketers to build social and ethical considerations into
their marketing
practices. They must balance and juggle the often-conflicting
criteria of company
profits, consumer want satisfaction and public interest.
Companies see cause-
related marketing as an opportunity to enhance their corporate
reputation, raise
brand awareness, increase customer loyalty, build sales and
increase press
coverage. They believe that consumers will increasingly look for
signs of goodcorporate citizenship that go beyond supplying
rational and emotional benefits.
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Q.5 What are the various stages involved in decision process
when a consumer
is buyingnew product? Also, explain the adoption p rocess.
Ans. Stages of the Consumer Buying Process Six Stages to the
Consumer Buying
Decision Process (For complex decisions). Actual purchasing is
only one stage of
the process. Not all decision processes lead to a purchase. All
consumer decisionsdo not always include all 6 stages, d etermined
by the degree ofcomplexity
discussed next.
The 6 stages are:
1. Problem Recognition (awareness of need)difference between the
desired state
and the actual condition. Deficit in assortment of products.
HungerFood. Hunger
stimulates our need to eat can be can be stimulated by the
marketer through
product informationdid not know you were deficient? I.E., see a
commercial for a
new pair of shoes, stimulates your recognition that you need a
new pair of shoes.
2. Information search
Internal search, memory.
External searches if you need more information. Friends and
relatives (word
of mouth). Marketer dominated sources Comparison shopping Public
sources etc.
A successful information search leaves a buyer with possible
alternatives, the
evoked set. Hungry, want to go out and eat, evoked set is
Chinese food
Indian food
Burger king
Klondike kates etc
Q. 6 Explain briefly the marketing mix elements for an
automobile companygiving sufficient examples.
Ans. Marketing mix is the combination of elements that you will
use to market
your product.There is four elements: Product, Place, Price and
Promotion. They
are called the four Ps of the marketing mix. The objectives of
this lesson about
marketing mix are to give you:-The tools you need for
establishing your detailed
marketing plan and forecasting your sales.
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1.Challenge 2.Product 3.Place 4.Price
5.Promotion 6.Sales strategy 7.Do it yourself 8. Coaching
1-CHALLENGE - You have gotten a rough idea about the market
situation and the
possible positioning of your product. Of course, its far to be
sufficien t. Now, you
must write your detailed planning. It means that brainstorming
is ended and that
you have to go to the specifics in examining and checking the
entire hypothesis
you had made in the preceding chapters. You will use the
marketing mix.
Some people think that the four Ps are old fashionable and
propose a new
paradigm:
The fourCs!
Product becomes customer needs Place becomes convenience, price
is replaced by
cost tothe user, promotion becomes communication. It looks like
a joke but the Cs
is more customer-oriented.
2-PRODUCT - A good product makes its marketing by itself because
it gives
benefits to the customer. We can expect that you have right now
a clear idea about
the benefits your product can offer. Suppose now that the
competitors products
offer the same benefits, same quality, and same price. You have
then to
differentiate your product with design, features, packaging,
services, warranties,
return and so on. In general, differentiation is mainly related
to:
-The design: it can be a decisive advantage but it changes with
fads. For example,
a fun board must offer a good and fashionable design adapted to
young people.
-The packaging: It must provide a better appearance and a
convenient use. In food
business, products often differ only by packaging.
-The safety: It does not concern fun board but it matters very
much for products
used by kids.
-The green: A friendly product to environment gets an advantage
among some
segments.
In business to business and for expensive items, the best mean
of differentiation
are warranties, return policy, maintenance service, time
payments and financial
and insurance services linked to the product.
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3-PLACE-DISTRIBUTION A crucial decision in any marketing mix is
to correctly
identify the distribution channels. The question
how to reach the customer must always be in your mind.
-Definition: The place is where you can expect to find your
customer andconsequently, where the sale is realized. Knowing this
place, you have to look for
a distribution channel in order to reach your customer.
In fact, instead of place it would be better to use the word
distribution but the
MBA lingo uses place to memorize the 4 Ps of the marketing
mix!
4-PRICE - Price means the pricing strategy you will use. You
have already fixed,
as an hypothesis a customer price fitted to your customer
profile but you will have
now to bargain it with the wholesalers and retailers. Do not be
foolish: They knowbetter the market than you and you have to listen
their advices.
5-PROMOTION - Advertising, public relations and so on are
included in
promotion and consequently in the 4Ps.Sometimes, packaging
becomes a fifth P.
As promotion is closely linked to the sales, I will mention here
the most common
features about the sale strategy.
-Definition: The function of promotion is to affect the customer
behavior in order
to close asale.
Of course, it must be consistent with the buying process
described in the consumer
analysis.Promotion includes mainly three topics: advertisement,
public relations,
and sales promotions.
-Advertisement:
It takes many forms: TV, radio, internet, newspapers, yellow
pages, and so on.
You have to take notice about three important notions: Reach is
the percentage ofthe target market which is affected by your
advertisement. For example, if you
advertise on radio you must know how many people belonging to
your segment
can be affected.
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Frequency is the number of time a person is exposed to your
message. It is said
that a person must be exposed seven times to the message before
to be aware of it.
Reach*frequency gives the gross rating point.
You have to evaluate it before any advertisement campaign.
Message: Sometimes, it is called a creative. Anyway, the message
must: get
attraction, capture interest, create desire and finally require
action that is to say
close the sale.
Down-earth-advice: There are some magical words that you can use
in any
message:-Your-YouI-Me-MyNow-Today-Fast-Easy-Cool-New-Fun-Updated-
Free-Exciting-
Astonishing-Success-Love-Money-Comfort-Protection-Freedom-Luck.-Publicrelations:
Public relations are more subtle and rely mainly on your own
personality. For example, you can deliver public speeches on
subjects such as
economics, geo-economics, futurology to several organizations
(civic groups,
political groups, fraternal organizations, professional
associations)
6-SALES STRATEGY
Sales bring in the money. Salesmen are directly exposed to the
pressure of finding
prospects, making deals, beating competition and bringing
money.
