Module 1 Introduction To Marketing Management

Introduction to Marketing Management

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Marketing Management

Aims To understand the key factors of

Marketing Management

Objective To Learn the meaning, importance, and concepts

of Marketing Management

To Learn the nature and importance & Characteristics of Service marketing


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Marketing Management After going through this session,

you will be able to: Understand Marketing Management Concepts & Importance of Marketing

Management Understand Nature & Importance of

Service Marketing Understand Characteristics of Service

Marketing


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Meaning The word market is derived form the Latin word

“Marcatus” meaning goods or trade or a place where business is conducted. The term marketing is defined as a ‘business activity planned at satisfying to a reasonable extent, consumer or customer needs and wants, generally through an exchange process’.

Marketing has been defined in various ways – the definition that serves our purpose best is as follows;

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


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Definition In a narrower business context, marketing

involves building profitable, value – laden exchange relationships with customers.

Hence, we define marketing as the process by which companies create value for customers & build strong customer relationships in order to capture value from customers in return.


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Definition of Marketing Management Philip Kotler - “Marketing is Social & Managerial process by

which Individuals & Groups obtain what they Need and Want through Creating, Offering and Exchanging products of the Value other”

Peter Drucker - Marketing is a social 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. For a managerial definition, marketing has often been described as “the art of selling products”

The American Marketing Association (AMA) - Marketing is the process of planning and executing the conception, pricing, promotion, & distribution of ideas, goods, & services to create exchanges that satisfy individual and organizational goals.


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The Marketing Process ModelCreate value for customers & build Customer relationship

Understand themarketplace &

customer needsand wants

Design aCustomer-driven

Marketing Strategy

Construct aMarketing Program

That deliversSuperior value

Build profitableRelationships &

Create Customerdelight

Capture value From Customers to

Create profits &Customer quality


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Evolution of Marketing The foundations of marketing in America

were laid in Colonial times, when the settlers traded among themselves & with the Native Americans.

Some settlers became retailers, wholesalers, & itinerant peddlers.

However, large-scale marketing in the U.S. did not begin to take shape until the Industrial Revolution in the latter part of the 1800s.

Since then, marketing has evolved through 3 successive stages of development: as…


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Three Stages of Marketing Evolution in the United States.

Product Orientation

Product Orientation Sales Orientation

Product Orientation

Other industries & organizations have progressed only to the sales-orientation stage

Many industries & organizations have progressed to the market-orientation stage

Late 1800s Early 1930s Mid – 1950s 1990s

Sales Orientation Market Orientation

Some industries & organizations remain at the product-orientation stage


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Product – Orientation Stage Manufacturers in the product-orientation

stage typically focused on the quality & quantity of output while assuming that customers would seek out & buy reasonably priced, well-made products.

In an era when the demand for goods generally exceeded the supply, the primary focus in business was to efficiently produce large quantities of product.

Finding customers was viewed as a relatively minor function.


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Sales – Orientation Stage The world economic crisis of the late 1920’s (referred

to as the Great Depression) changed the perception Finds that the economic problem no longer was how

to manufacture efficiently, but rather it was how to sell the resulting output

Just offering a quality product was no assurance of success

Managers realize to sell their products to consumers having limited resources & numerous options required substantial post production effort

The Sales-orientation stage was characterized by a heavy reliance on promotional activity to sell the products the firm wanted to make.


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Market – Orientation Stage At the end of world war II there was strong pent-up demand

for consumer goods created by wartime shortage In an attempt to stimulate sales, firms reverted to the

aggressive promotional & sales activities of the sales-orientation era

Sellers discovered that the war years had also changed consumers

In addition, the war efforts brought many women out of the home & into the work force for the first time

In addition the consumers had more choices The technology that was developed during the war made it

possible to produce much greater variety of goods At this stage companies identify what customers want &

tailor all the activities of the firm to satisfy those needs as efficiently as possible


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Importance of Marketing

Employment&

Costs

Global

Importance of Marketing can be understood in 4 different perspective

Domestic

Organization

Personal

CreatingUtility


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Importance of Marketing Global Perspective

Until the late 1970s, American firms had a large and secure domestic market

1980’s more foreign firms developed attractive products, honed their marketing expertise, & then successfully entered the U S market.

Imported products, such as office equipment, autos, apparel, watches, semiconductors & consumer electronics have been successful

At present US has been importing more than it exports, creating large annual trade deficits


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Importance of Marketing In Global Perspective Contd..

There will be a new challenges The changes taking places in the

governments & economics of eastern Europe & growing capitalism in China & former Soviet Union will certainly create new & stronger International Competitors

Trade agreements are also altering the global business picture The European Union, the North American Free

Trade Agreement, The Asia-Pacific Economic Cooperation forum are

reducing economic barriers & liberalizing trade between their members


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Importance of Marketing In Global Perspective Contd..

Trade agreements increase the marketing opportunities for firms, they can often result in stiffened competition for firms from outside

Considering these developments the US firms look abroad, they are concluding that their profit & Growth objectives are most likely to be achieved through the combination of domestic & international marketing, rather than solely from domestic marketing


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Importance of Marketing In Domestic Perspective

Domestic Perspective Aggressive, effective marketing practices have

been largely responsible for the high standard of living in US

The efficiency of mass marketing-extensive & rapid communication with customers through a wide variety of media & distribution system that makes product readily available to the consumers

Since 1920 (except during World War II), the available supply of products in Us has far surpassed total demand

Making most products has been relatively easy; the real challenge has been marketing them


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Employment and Costs The Significance of marketing in US Economy can

give an idea of how many of us are employed – between 1/4th & 1/3rd of US civilian labor force are engaged in marketing activity, which includes employees in retailing, wholesaling, transportation, warehousing & communications industries & also people who work in marketing departments of a manufacturers & those who work in marketing in agricultural, mining & service industries

Furthermore, jobs in marketing have increased at a much more rapid rate than jobs in production, reflecting marketing’s expanded role in economy


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Creating Utility A customer purchase a product because it provides

satisfaction The want-satisfying power of a product is called as

Utility, & it comes in many forms. It is through marketing that much of a product’s utility is created Form utility – changes makes the product valuable Place utility – when product is readily available Time utility – product available when you want Information utility – information of a product

existence Possession utility – created when a customer buys


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Importance of Marketing In Organizational Perspective

Organizational Perspective Marketing considerations should be an integral

part of all short-range & long-range planning in any company The success of any business comes from

satisfying the wants of its customers, which is the social & economic basis for the existence of all organizations

Although many activities are essential to a company’s growth, marketing is the only one that produces revenue directly

The traditional approach of designing the product by designers, pricing by finance managers have changed in present marketing environment


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Importance of Marketing In Personal Perspective

Personal / Individual Perspective The reasons for understanding marketing globally in

our economy & in an individual organization are as under; How many marketers view us a part of their market –

firms such as Nike, Microsoft, VISA & etc have designed products, set prices, created advertisements & chose the best way to make their products available to us

Studying marketing will makes us better-informed consumers, which helps to understand why some firms are successful and others fail

Lastly, marketing may probably relates – directly or indirectly – to our career aspirations


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Marketing Concepts Components & outcomes of the marketing concept

+ +Organization’s

Performance objectives

Customer Orientation

CoordinatedMarketing

activity

MARKETING CONCEPT

CustomerSatisfaction

OrganizationalSuccess


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Marketing Concepts

This definition of marketing rests as the following core concepts; needs; wants; & demands; products (goods, services & ideas); values, cost & satisfaction; exchange & transactions; relationships & networks; markets; & marketers & prospects. These concepts are illustrated in figure:


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The Core Concepts of Marketing

Needs, wants,& demands

Products (goods,

Services, Ideas)

Value, cost,&

satisfaction

Exchange &transactions

Relationships& networks

MarketsMarketers &

prospects


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Needs, Wants & Demands Marketing starts with human needs & wants A human need is a state of deprivation of

some basic satisfaction Wants are desires for specific satisfiers of

needs Demands are wants for specific products

that are backed by an ability & willingness to buy them

These distinctions shed light on the frequent criticism that “marketers create needs” or “marketers get people to buy things they don’t want”


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Products (Goods, Services, & Ideas)

A product is any thing that can be offered to satisfy a need or want – product can be also called as offering or solution

A product or offering can consist of as many as 3 components:

Physical good(s), Service(s), & Idea(s)


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Value, Cost & Satisfaction Consumers to choose among the many products that satisfy

a given need Example: A customer needs to travel for a work – he could

use several products for his need: A bicycle, motor cycle, a car, a taxicab or a bus –

these alternatives will constitute his product choice setAssume he would like to satisfy several additional

needs in traveling to work; namely needs, safety, ease, & economy.Each product has a different capacity to satisfy his need set.

A bicycle is slower, less safe, & requires more effort than a car, but a bicycle is more economical.

The customer has to decide to which product will deliver the most total satisfaction

Cost plays a secondary role


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Exchange & Transactions People can obtain products in one of 4 ways:

Self-production – hungry people can relieve through hunting, fishing, or fruit gathering

By coercion – hungry people can wrest or steal food from others

By begging – hungry people can approach others & beg for food

By exchange – hungry people can offer a resource in return for food such as money, a good, or a service

Exchange must be seen as a process rather than as an event. 2 parties are engaged in exchange if they are negotiating and moving toward an agreement. When an agreement is reached, we say that a transaction takes place.


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Relationships & Networks Transaction marketing is part of a larger idea called

relationship marketing

Relationship marketing is a practice of building long-term, trusting, “win-win” satisfying relations with key parties-customers, suppliers, dealers, distributors – in order to retain their long-term preference & business

They accomplish this by promising & delivering high quality, good service, & fair prices to the other parties over time.

The ultimate out come of relationship marketing is the building of a unique company asset called a marketing network. A Marketing Network consists of the company & all of its supporting stakeholders: customers, suppliers, employees, distributors, retailers, ad agencies, university scientists, & other with whom it had built mutually profitable business relationships.


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Relationships & NetworksTwo – party Exchange Map Showing Want Lists of Both Parties

Construction Co.(Prospect)

Caterpillar(Marketer)

Construction Co. Want List1. High-quality, durable equipment2. Fair Price3. On-time delivery of equipment4. Good financing terms5. Good parts & service

Caterpillar Want ListGood price for Equipment

On-time paymentGood word of mouth


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Markets A concept of exchange leads to the concept of a

market A market consists of all the potential customers

sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want

Traditionally, a “Market” was the place where buyers & sellers gathered to exchange their goods, such as a village square.

Marketers, however, see the sellers as constituting the industry and the buyers as constituting the market


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A Simple Marketing SystemFigure show the relationship between the industry & the market

The sellers send goods & services & communications (ads, direct mail, & so forth) to market; in return they receive money & information (attitudes, sales data, & so forth)

The inner loop shows an exchange of money for goods & services; the outer loop shows an exchange of information.

Industry(a collectionOf Sellers)

Market(a collectionof buyers)

Goods / services

Money

Communication

Information


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Marketers & Prospects When one party is more actively seeking an

exchange than the other party, we call the first party a marketer & the second party a prospect

A marketer is someone seeking one or more prospects who might engage in an exchange of values.

A prospect is someone whom the marketer identifies as potentially willing & able to engage in an exchange of values


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Features of ConceptsDiffering orientations to Business GivesRise to Different Concepts of Marketing

The Exchange Concept The Production Concept The Product Concept The Sales Concept – Diff b/w Marketing & Sales The Marketing Concept – A Shift in orientation

From production to marketing From product to customer From supply to demand From sales to satisfaction From internal to external


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Definition of Marketing ConceptWe are ready to give a definition to the

marketing conceptThe marketing concept is essentially a point of

view about business. It enunciates that business is basically a “need-satisfying process” & that business must be managed keeping the consumer & his need as the focus.

The concept prescribes that all goals of business, including profit, must be realized through consumer orientation & generation of customer satisfaction


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Definition of a Service Marketing It is difficult to provide one single definition of a service. Level 1: service is an intangible offering with little or no

transfer of physical products to the customer. Ex; car rentals, insurance, education

Level 2: service is a one part of product-service mix being offered to customers. Ex; restaurants. The physical goods are as important as the service part of the offering & customers have to be satisfied with both

Level 3: the main offering is the product but the supplier also provides some service. Ex; car service & installation of equipment

Level 4: every product or service or any combination of a mix of the two ultimately is supposed to provide service for customer. The customer buys a car because it provides him transportation services. This idea is gaining ground as companies are increasingly trying to become customer oriented


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Services Most above attempted definition are

incomprehensible. The concept of service has to be understood either as an exclusive offering from a company that is primarily intangible, or as a part of the service-product mix that a company offers

Services Marketing Includes Since Services are highly intangible, its

benefits are felt over a period of time & not immediately


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Paradigms in services Marketing Service as a process

In service marketing, since customers are often involved in the production of services, marketers need to understand the nature of the service process & the stages in this process that are exposed to customers

It is important for the service marketers to understand each of the moments of truth involved in the service process because the service brand will be developed only when each of them have been managed in an honest & sincere manner

The experience of service leaders has shown that they tend to bring back office to the front so that the customer is able to know to operations & provide feedback on service design improvement


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Paradigms in services Marketing Classification of Services

People processing services: a marketer involved in people processing services tries to create a new set of values in the industry for the customers

Product / Possession Processing Services: the customer evaluates the services, on the basis of tangible promises being delivered within a defined time period at a pre-negotiated price

Mental Stimulus Processing: has a impact on consumer mind & have the potential to shape their attitudes, behavior & lifestyle

Information Processing Services: the marketer should understand that information is the most tangible form of service output, mostly vital from the point of customer’s own competitive advantage


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Paradigms in services Marketing Do it Right the First Time: a bad service

delivery not only creates a dissatisfied customer, but also severely impacts the brand equity

Speed! Speed!! Speed!!!: speed holds the key to brand planning in the service industry

Keeping Customer Perspective Always: service marketing cannot succeed without always maintaining the customer’s perspective at all levels of the organization


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Nature of Services It is important to understand that services are different

from products & this difference warrants a change in the way services are marketed. Intangibility: cannot be seen, tasted or touched

before they are brought. It is a deed, performance, or effort (eg: Holiday, hospitals)

Inseparability: involve simultaneous Production & Consumption

Presence of other consumers: may take place in the presence of other consumers

Variability: standardization is difficult in provision of services - vary in their skills & attitude & are subject to simultaneous production & consumption

Perishability: it can not be stored for the future & hence its consumption cannot be deferred (eg: No. of hotel rooms in a hotel premise. Should match the supply & demand


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Characteristics of Service Marketing Intangibility: the customer decision is completely dependent

on is understanding of the service product at a given point of time & his belief in the marketer’s promise of future performance

Low Price Sensitivity: performance & price sensitivity are inversely related

No Inventory: profitability & viability are extremely critical for the service provider is to deliver exemplary service to the customer

Value Creation Process: in service industry is through people, process, proof of performance & the pace at which the service is delivered

Tangibility: is provided to the service product by the service provider, communication & the speed at which the service is delivered. The ambiance of the service product helps in creating an appropriate set of beliefs which will help reassure the customer. In the context of internet services like call centers, or

dedicated websites like shaadi.com or contest2win.com, etc


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Characteristics of Service Marketing Inseparability: services can not be separated from

the creator-seller of the service. Eg: Dentists create & dispense almost all their services at the same time, & they require the presence of the consumer for the services to be performed

Heterogeneity: it is difficult of not impossible for a service firm, or even an individual seller of services, to standardize output . Each unit of service is somewhat different from every other unit of the same service

Perishability: the services can not be stored or inventoried for future use.


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Importance of Services Marketing In most industrialized economies, expenditure on

services is growing due to: Advances in technology that has led to more

sophisticated products that require more services Growth of per capita income has given rise to a

greater percentage of income being spent on luxuries such as restaurants, overseas holidays, etc.,

A trend towards outsourcing means that manufacturers are buying services that are outside the firm’s core expertise (warehousing, catering)

Deregulation has increased level of competition in certain service industries like telecom

Due to growth in per capita income, people are buying more goods, which has contributed to making retailing an important service


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Key Terms & Concepts

Exchange Marketing Product-orientation Sales-orientation Marketing-orientation Marketing concepts Customer Relationship

Management Mass communication

TQM, Value, Value Creation

Return on Marketing Investment

Marketing, Societal Marketing Concept

Segments, Target, & Position

Marketing, Ethics, & Demand

What are the Key Terms & Concepts that you have Understood?


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Bibliography Meaning Marketing Management – Marketing Management

9th Edition & Principles of Marketing 11th Edition – Philip Kotler – PHI

Evolution – Marketing Concepts & Cases 13th Edition J Stanton (Indian Context) – TMH

Importance – Marketing Concepts & Cases 13th Edition J Stanton (Indian Context) – TMH

Concepts – Marketing Management 9th Edition Philip Kotler – PHI & Marketing Concepts & Cases 13th Edition J Stanton (Indian Context) – TMH

Nature & importance of Services Marketing – Marketing Management – Arun Kumar, Meenakshi – Vikas & Marketing Management – 3rd Edition – Rajan Saxena - TMH

Characteristics of Services Marketing – Marketing Management – Arun Kumar, Meenakshi – Vikas & Marketing Management – 3rd Edition – Rajan Saxena - TMH

Education

Module 1 Introduction To Marketing Management