UNIT - IVMARKETING MANAGEMENT

BY NISHANT

Concept of Marketing Management

Marketing is a business function that identifies consumer needs, determines target markets and applies products and services to serve these markets. It also involves promoting such products and services within the marketplace.

Marketing is integral to the success of a business, large or small, with its primary focus on quality, consumer value and customer satisfaction. A strategy commonly utilised is the “Marketing Mix". This tool is made up of four variables known as the "Four P's" of marketing. The marketing mix blends these variables together to produce the results it wants to achieve in its specific target market.

Five orientations philosophical concepts to the marketplace have guided and continue to guide organizational activities:

1. The Production Concept

2. The Product Concept

3. The Selling Concept

4. The Marketing Concept

5. The Societal Marketing Concept

The Production Concept- This concept is the oldest of the concepts in business. It holds that consumers will prefer

products that are widely available and inexpensive. Managers focusing on this concept concentrate on achieving high production efficiency, low costs, and mass distribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features.

The Product Concept This orientation holds that consumers will favour those products that offer the most quality,

performance, or innovative features. Managers focusing on this concept concentrate on making superior products and improving them over time. They assume that buyers admire well-made products and can appraise quality and performance. However, these managers are sometimes caught up in a love affair with their product and do not realize what the market needs. Management might commit the “better-mousetrap” fallacy, believing that a better mousetrap will lead people to beat a path to its door.

The Selling Concept This is another common business orientation. It holds that consumers and businesses, if left

alone, will ordinarily not buy enough of the selling company’s products. The organization must, therefore, undertake an aggressive selling and promotion effort. This concept assumes that consumers typically sho9w buyi8ng inertia or resistance and must be coaxed into buying. It also assumes that the company has a whole battery of effective selling and promotional tools to stimulate more buying. Most firms practice the selling concept when they have overcapacity. Their aim is to sell what they make rather than make what the market wants.

The Marketing Concept This is a business philosophy that challenges the above three business orientations. Its

central tenets crystallized in the 1950s. It holds that the key to achieving its organizational goals (goals of the selling company) consists of the company being more effective than competitors in creating, delivering, and communicating customer value to its selected target customers. The marketing concept rests on four pillars: target market, customer needs, integrated marketing and profitability.

Distinctions between the Sales Concept and the Marketing Concept:

1. The Sales Concept focuses on the needs of the seller. The Marketing Concept focuses on the needs of the buyer.

2. The Sales Concept is preoccupied with the seller’s need to convert his/her product into cash. The Marketing Concept is preoccupied with the idea of satisfying the needs of the customer by means of the product as a solution to the customer’s problem (needs).

3. The Marketing Concept represents the major change in today’s company orientation that provides the foundation to achieve competitive advantage. This philosophy is the foundation of consultative selling.

4. The Marketing Concept has evolved into a fifth and more refined company orientation: The Societal Marketing Concept. This concept is more theoretical and will undoubtedly influence future forms of marketing and selling approaches.

The Societal Marketing Concept

This concept holds that the organization’s task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept). Additionally, it holds that this all must be done in a way that preserves or enhances the consumer’s and the society’s well-being.

This orientation arose as some questioned whether the Marketing Concept is an appropriate philosophy in an age of environmental deterioration, resource shortages, explosive population growth, world hunger and poverty, and neglected social services.

Are companies that do an excellent job of satisfying consumer wants necessarily acting in the best long-run interests of consumers and society?

The marketing concept possibly sidesteps the potential conflicts among consumer wants, consumer interests, and long-run societal welfare. Just consider:

P’s of Marketing

Product Products are the goods and services that your business provides for sale to your target

market. When developing a product you should consider quality, design, features, money dollars covering costs expenses packaging, customer service and any subsequent after-sales service.

Place Place is in regards to distribution, location and methods of getting the product to the

customer. This includes the location of your business, shop front, distributors, logistics and the potential use of the internet to sell products directly to consumers.

Price Price concerns the amount of money that customers must pay in order to purchase your

products. There are a number of considerations in relation to price including price setting, discounting, credit and cash purchases as well as credit collection.

Promotion Promotion refers to the act of communicating the benefits and value of your product to

consumers. It then involves persuading general consumers to become customers of your business using methods such as advertising, direct marketing, personal selling and sales promotion.

Product Life Cycle

The product life cycle has 4 very clearly defined stages, each with its own characteristics that mean different things for business that are trying to manage the life cycle of their particular products.

Introduction Stage – This stage of the cycle could be the most expensive for a company launching a

new product. The size of the market for the product is small, which means sales are low, although they will be increasing. On the other hand, the cost of things like research and development, consumer testing, and the marketing needed to launch the product can be very high, especially if it’s a competitive sector.

Growth Stage – The growth stage is typically characterized by a strong growth in sales and

profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase. This makes it possible for businesses to invest more money in the promotional activity to maximize the potential of this growth stage.

Maturity Stage – During the maturity stage, the product is established and the aim for

the manufacturer is now to maintain the market share they have built up. This is probably the most competitive time for most products and businesses need to invest wisely in any marketing they undertake. They also need to consider any product modifications or improvements to the production process which might give them a competitive advantage.

Decline Stage – Eventually, the market for a product will start to shrink, and this is

what’s known as the decline stage. This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a different type of product. While this decline may be inevitable, it may still be possible for companies to make some profit by switching to less-expensive production methods and cheaper markets.

Here is the example of watching recorded television and the various stages of each method:

Introduction - 3D TVs

Growth  - Blueray discs/DVR

Maturity  - DVD

Decline  - Video cassette

Market Segmentation Marketing segmentation is the identification of portions of the market that are

different from one another. Segmentation allows the firm to better satisfy the needs of the potential customers.

Need of Market Segmentation The marketing concept calls for understanding customers and satisfying their

needs better than the competition. But different customers have different needs, and it rarely is possible to satisfy all customers by treating them alike.

Mass marketing refers to treatment of the market as a homogenous group and offering the same marketing mix to all customers. Mass marketing allows economies of scale to be realized through mass production, mass distribution, and mass communication. The drawback of mass marketing is that customer needs and preferences differ and the same offering is unlikely to be viewed as optimal by all customers. If firms ignored the differing customer needs, another firm likely would enter the market with a product that serves a specific group, and the incumbent firms would lose those customers.

Target marketing on the other hand recognizes the diversity of customers and does not try to please all of them with the same offering. The first step in target marketing is to identify different market segments and their needs.

Requirements of Market Segments

In addition to having different needs, for segments to be practical they should be evaluated against the following criteria:

Identifiable: the differentiating attributes of the segments must be measurable so that they can be identified.

Accessible: the segments must be reachable through communication and distribution channels.

Substantial: the segments should be sufficiently large to justify the resources required to target them.

Unique needs: to justify separate offerings, the segments must respond differently to the different marketing mixes.

Durable: the segments should be relatively stable to minimize the cost of frequent changes.

Consumer Market Segmentation

A basis for segmentation is a factor that varies among groups within a market, but that is consistent within groups. One can identify four primary bases on which to segment a consumer market:

Geographic segmentation is based on regional variables such as region, climate, population density, and population growth rate.

Demographic segmentation is based on variables such as age, gender, ethnicity, education, occupation, income, and family status.

Psychographic segmentation is based on variables such as values, attitudes, and lifestyle.

Behavioural segmentation is based on variables such as usage rate and patterns, price sensitivity, brand loyalty, and benefits sought.

Business Market SegmentationWhile many of the consumer market segmentation bases can be

applied to businesses and organizations, the different nature of business markets often leads to segmentation on the following bases:

Geographic segmentation - based on regional variables such as customer concentration, regional industrial growth rate, and international macroeconomic factors.

Customer type - based on factors such as the size of the organization, its industry, position in the value chain, etc.

Buyer behaviour - based on factors such as loyalty to suppliers, usage patterns, and order size.

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