Marketing Management

June 2009

MARKETING MANAGEMENT JUHI MODI L.S.Raheja BMS

Why Study Marketing? •

Plays an important role in society

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Vital to business survival, profits, and growth

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Offers career opportunities

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Affects your life every day

“Marketing is too important to be left to the marketing department.” --David Packard, Hewlett-Packard

What is Marketing ? • Personal Selling? • Advertising? • Making products available in stores? • Maintaining inventories? All of the above, plus much more!

What is Marketing ?

A Philosophy A Function A Management Orientation

A Set of Activities, including: Products Services Pricing Promotion Distribution

What is Marketing ?

What is Marketing ? The American Marketing Association 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 goals.

Functions of Marketing Market Research

Other Functional Areas

Product Development

Branding

Test Marketing

Advertising

MARKETING

After Sale Service

Sales Promotion

Pricing Personal Selling

Physical Distribution

Core Marketing Concepts          

Needs , Wants & Demands Marketers , Prospects & a Market Product or Offering The Exchange Concept Developing Competitive Advantage Market Segmentation & Target Markets Marketing Environment Marketing Mix Marketing Channels Supply Chain

Needs , Wants & Demands Needs are basic human requirements which need to be fulfilled in order to survive.

The needs become wants when they are directed to specific objects that may satisfy the need.

Demands are wants or desires backed by ability to pay & willingness to buy specific products.

Marketers , Prospects & a Market A Marketer is someone seeking a response from another party , called the prospect.

A Market is a group of people or organization , with needs or wants & with the ability & willingness to buy.

Product or Offering Product is any offering that can satisfy a need or a want.

Brand is an offering from a known source , which identifies a seller’s product & differentiates it from the competitors’ product.

The Exchange Concept Exchange involves obtaining a desired product from someone by offering something in return.

At Least Two Parties

Necessary Conditions for Exchange

Something of Value

Ability to Communicate Offer

Freedom to Accept or Reject Desire to Deal With Other Part

The Exchange Concept Exchange may not take place even if conditions are met An Agreement must be reached Marketing occurs even if exchange does not take place

The Exchange Concept A Transaction is a trade of values between two parties, on monetary or barter basis. A Transaction involves several dimensions :– At Least Two things of value – Agreed upon conditions – A time of agreement – A place of agreement Transfer differs from transaction , it can take place without consideration.

Developing Competitive Advantage Companies Create Competitive Advantage by Stressing Customer Importance

Create Customer Value

Retain customers & build Long term relationships Maintain Customer Satisfaction

Customer Value • Customer value is the bundle of benefits customers expect from a given product or service. • Its no longer enough to satisfy the customer , you must delight them! • Customers are value maximizers • Marketing is process of Value Creation between two entities through the process of transaction.

Customer Satisfaction

Customer Satisfaction is a consumer’s feelings resulting from comparing a product’s outcome in relation to his/her expectations. – A marketer must meet or exceed customer’s expectations. – Focus on keeping customers satisfied. – Provide solutions to customer’s problems.

Customer Retention Customer retention is about developing loyal customers & building long term relationships. The key to customer retention is customer satisfaction. A Highly satisfied customer – –

always stays loyal to the company . pays less attention to competing brands & is less sensitive to price. – Costs less to serve than new customers as the transactions are routinized. – Talks favorably about the company & its products.

Market Segmentation & Target Markets Market Segmentation is a process of dividing a market into meaningful, relatively similar, identifiable segments or groups. –

identifying those segments that offer greatest opportunity to serve.

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The selected market segment becomes the Target Market.

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The marketer develops a market offering for each Target Market.

Market Segmentation & Target Markets

Marketing Environment

Marketing mix Marketing mix is a set of marketing variables that the firm uses to pursue its marketing objectives in the target market. E.Jerome McCarthy classified these variables ,which he called the four Ps of Marketing.

 PRODUCT  PRICE  PLACE  PROMOTION

Marketing mix

Marketing mix Apart from the 4 Ps of Marketing , there have been attempts to develop an ‘extended marketing mix’ to better accommodate specific aspects of marketing.

•People •Process • Physical Enviornment

Marketing mix

Marketing mix The 3 C’s Model comprises of : Customer Analysis

Company Analysis

Competition Analysis

Marketing Channels Marketing Channels link the marketer to the target customers.

To reach to the target customer the marketer uses three kinds of channels.

Communication Channels –

To deliver & receive messages from target buyers.

Distribution Channels –

To display or deliver the physical product or service to the buyer or user.

Selling Channels –

To effect transactions with potential buyers.

Marketing Channels

Examples of Marketing Channels

Supply Chain The Supply Chain is the connecting link from the raw materials & components to final products which are delivered to the buyers.

A Cigarette Co. Supply Chain

Marketing Management Philosophies The Production Concept The Production concept holds that consumers will prefer products which are widely available & inexpensive. – Achieving high production efficiency – Low costs – Mass distribution – less developed countries – Market expansion

Marketing Management Philosophies

The Product Concept The Product concept holds that consumers will favor the most quality , performance or innovative features – Product Excellence & Quality Assurance – The Management & Product Love Affair – Marketing Myopia

Marketing Management Philosophies

The Selling Concept The Selling concept holds that consumers & businesses if left alone ,will ordinarily not buy enough of the organizations products. – Aggressive selling & promotion effort – Unsought goods & non profit areas – Hard Sell v/s consumer wants – Overcapacity

Marketing Management Philosophies The Marketing Concept The Marketing concept holds that consumers a business should start with the determination of consumer wants & end with the satisfaction of those wants. – Consumer Orientation – Integrated Management – Customer Satisfaction – Competitor Intelligence – Realization of Organizational Goals

Marketing Management Philosophies

RELATIONSHIP MARKETING Involves building long term mutually satisfying Relations with key parties , in order to earn & retain their long term preference & business. Marketers have realized that the success of marketing depends upon relationships with : Customers Distributors Dealers Suppliers

The operating principle is simple: build an effective network of relationships with key stakeholders & profits will follow.

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

SOCIETAL MARKETING

Societal Marketing = Consumer Satisfaction + Company ‘ s Profits + Society’s well being

Societal Marketing Focuses on satisfying customer needs & wants while enhancing individual & societal well-being

Importance of Marketing •Information for Marketing Decisions •Accomplishment of firm’s objectives •Widens Markets •Reputation •Helps to Develop Brand Loyalty •Helps to introduce new product •Helps to face competition •Movement of goods

Marketing v/s Selling Meaning Center / Focus Perspective Target Market Focus Marketing Mix Process Nature of Process Price Determination Inter-functional Integration views on customer focus Market

Marketing Activities Gather, analyze, interpret information about environment Understand organization’s mission and marketing’s role Conduct a market opportunity analysis Develop a marketing strategy Implement the marketing strategy Evaluate marketing efforts and make changes

Marketing Process

Trends in Marketing E-Commerce / E-Marketing Web / Internet Marketing Marketing using social networks

E-Commerce •

Business done online.

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The biggest development in commerce since invention of money.

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Changing the way people work , buy & Live.

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Involves exchange of products , services , information & payment through the electronic medium of computers/networks.

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E-commerce results when a firm connects its business systems to its customers , distributors , vendors etc…

E-Commerce It is the umbrella term for the entire spectrum of activities such as electronic data interchange , electronic payment systems , order management , information exchange & other business applications with paperless or electronic documentation. Ecommerce has three broad components B B to B B to C

Web Marketing A Firms efforts to communicate , promote & sell its products & services over the internet. Interactive form of marketing The two components of web marketing are :  Marketing to Business Buyers  Marketing to ultimate consumers

Web Marketing We can view web marketing in four ways : •A Business • A Medium • A Marketing Channel (or tool for channel less marketing) •A Complete Market place •Elevation of the Web from a medium of communication to a marketing channel to a complete market place. •The largest, most dynamic, sleepless, electronic bazaar/mall of goods and services , the world has ever seen!!

Conducting Online Marketing

Electronic Presence Advertising On-Line Forums, Newsgroups, Bulletin Boards & web communities Email & Web casting

Benefits to Consumers Convenience Scope for informed & competitive buying • • • • • •

Search advantage & options Bargain!! Can get “more for less” Transparency Accuracy

Shift of the power equation

Benefits to marketers Access to all markets. Renders global marketing feasible for even small firms. Helps constraints-free growth. Scope for enhancing customer value & customer service. Helps Relationship building Helps reduce costs Enhances productivity of sales people Enables to adjust quickly to market conditions •

A versatile medium of communication.

Limitations All products do not lend equally well for Web marketing Limitation of examining the product Problem of Delivery Problem of confidence Problem of payment Low Density of PC’s & internet Legal Problems

Indian Firms taking to Web Marketing Banking Industry Entertainment Industry Information Service Stock Broking Airways Hotels Others

Problems Web Marketing faces in India Legal / Regulatory Problems • E-documentation is not yet legally admissible • Absence of Taxation Law

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Infrastructural Problems • Low density of telephone, PCs & internet access •Infrastructural bottlenecks

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Commercial Problems

• Problem relating to payment • Low density of credit cards • Inability to pay foreign suppliers

Other Problems

•Confidence in the system is low •Problem of Hacking •Problem of Illiteracy