Marketing Management

Marketing Management Defining Marketing for the  Twenty­First Century

The Chartered Institute of Marketing ‘Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably’

Adcock et al

The right product, in the right place, at the right time, and at the right price’

Kotler 1980 Marketing is the human activity directed at satisfying human needs and wants through an exchange process’

Kotler 1991 ‘Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’

Objectives  Understand the new economy.  Learn the tasks of marketing.  Become familiar with the major concepts and tools of marketing.  Understand the orientations exhibited by companies.

Objectives  Learn how companies and marketers are responding to new challenges.

The New Economy  Consumer benefits from the digital revolution include: – Increased buying power. – Greater variety of goods and services. – Increased information. – Enhanced shopping convenience. – Greater opportunities to compare product information with others.

The New Economy  Firm benefits from the digital revolution include: – New promotional medium. – Access to richer research data. – Enhanced employee and customer communication. – Ability to customize promotions.

Challenges of Today’s Organization Change Bigness

Govt. Interference Competition

Organization

Information

Diversification

Globalization Science & Tech

What Can Be Marketed?  Goods

 Places

 Services

 Properties

 Experiences

 Organizations

 Events

 Information

 Persons

 Ideas

Product Places

Goods

Ideas

Services Information

Product Persons Properties

Experiences

Events

Organizations

Marketing Defined  Kotler’s Social Definition: “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.”

Marketing Defined  The AMA Managerial 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 objectives.”

Core Marketing Concepts  Target markets and market segmentation

 Exchange and transactions

 Marketplace, marketspace, metamarkets

 Relationship and networks

 Marketers & prospects

 Marketing channels

 Needs, wants, demands

 Supply chain

 Product offering and brand

 Competition

 Value and satisfaction

 Marketing program

 Marketing environment

Core Marketing Concepts  Target markets & segmentation – Differences in needs, behavior, demographics or psychographics are used to identify segments. – The segment served by the firm is called the target market. – The market offering is customized to the needs of the target market.

Core Marketing Concepts  Needs describe basic human requirements such as food, air, water, clothing, shelter, recreation, education, and entertainment.  Needs become wants when they are directed to specific objects that might satisfy the need. (Fast food)  Demands are wants for specific products backed by an ability to pay.

Core Marketing Concepts  A Product is any offering that can satisfy a need or want, while a brand is a specific offering from a known source.  When offerings deliver value and satisfaction to the buyer, they are successful.

Enhancing Value  Marketers can enhance the value of an offering to the customer by: – Raising benefits. – Reducing costs. – Raising benefits while lowering costs. – Raising benefits by more than the increase in costs. – Lowering benefits by less than the reduction in costs.

Core Marketing Concepts  Exchange involves obtaining a desired product from someone by offering something in return. Five conditions must be satisfied for exchange to occur.  Transaction involves at least two things of value, agreed-upon conditions, a time of agreement, and a place of agreement.

Core Marketing Concepts  Relationship marketing aims to build long-term mutually satisfying relations with key parties, which ultimately results in marketing network between the company and its supporting stakeholders.

Core Marketing Concepts Marketing Channels  Communication channels  Distribution channels  Service channels

 Deliver messages to and receive messages from target buyers.  Includes traditional media, non-verbal communication, and store atmospherics.

Core Marketing Concepts Marketing Channels  Communication channels  Distribution channels  Service channels

 Display or deliver the physical products or services to the buyer / user.

Core Marketing Concepts Marketing Channels  Communication channels  Distribution channels  Service channels

 Carry out transactions with potential buyers by facilitating the transaction.

Core Marketing Concepts  A supply chain stretches from raw materials to components to final products that are carried to final buyers.  Each company captures only a certain percentage of the total value generated by the supply chain.

Marketing Mix  The marketing program is developed to achieve the company’s objectives. Marketing mix decisions include: – Product: provides customer solution. – Price: represents the customer’s cost. – Place: customer convenience is key. – Promotion: communicates with customer.

Marketing Mix Mkt Mix

Product

Price

Placement

Promotion

Marketing Mix  Product

 Price

 Promotion  Place

Product Variety Quality

List Price

Sales Promotion

Channels

Discounts

Advertising

Coverage

Brand Name

Allowances

Sales Force

Assortments

Packaging

Payment Period

Public Relations

Locations

Publicity

Inventory

Design Features

Sizes Services Warranties Returns

Transport

Competing Marketing Concepts  The orientation or philosophy of the firm typically guides marketing efforts. Several competing orientations exist: – Production concept – Product concept – Selling concept – Marketing concept – Societal marketing concept

Competing Marketing Concepts Production Concept Product Concept Marketing Concepts

Selling Concept

Societal Marketing

Marketing Concept

The Marketing Concept  Achieving organizational goals requires that company be more effective than competitors in creating, delivering, and communicating customer value.  Four pillars of the marketing concept: – Target market – Customer needs – Integrated marketing – Profitability

Changes in the Marketplace  Globalization, technological advances, and deregulation have created many challenges: – Customers – Brand manufacturers – Store-based retailers

 Both companies and marketers have been forced to respond and adjust.

Levels of Competition  Four levels of competition can be distinguished by the level of product substitutability: – Brand competition – Industry competition – Form competition – Generic competition

Levels of Competition Brand

Industry

Competition

Generic

Form

Marketing Environment  Task Environment  Broad Environment

Organization’s Environment Macro or Far Environment

Technological Factors

Near or Operating Environment Partners

Customers

Clients

Economic Factors

ORGANIZATION Suppliers

Social Factors

Competitors

Political Factors

Task Environment  Company  Suppliers  Distributors  Dealers  Target Customers  Competitors

Broad Marketing Environment  The following forces in the Broad Environment have a major impact on the Task Environment: – Demographics – Economics – Natural environment – Technological environment – Political-legal environment – Social-cultural environment

Demographic Environment  Population Age Mix  Population Growth  Ethnic Group  Education Status  Household Patterns

Economic Environment  Income Distribution Subsistence Economies Raw Material Exporting Economies Industrializing Economies Industrialized Economies

 Savings, Debt and Credit Availability

Natural Environment  Shortage of Raw Materials  Increased Energy Costs  Increased Pollution Levels  Changing Role of Government

Technological Environment  Accelerating Technological Change  Innovation Opportunities  Varying R&D Budgets  Regulations of Technological Change

Political-Legal Environment  Legislation Regulating Business  Growth of Special Interest Groups

Social-Cultural Environment  Beliefs  Values  Norms  Subculture

SWOT Analysis  Strengths (Internal)  Weaknesses (Internal)  Opportunities (External)  Threats (External)

SWOT Analysis Analysis SWOT

Contents of the Marketing Plan – Executive Summary – Current Marketing Situation – Opportunity and issue analysis – Objectives – Marketing strategy – Action programs – Financial projections – Implementation controls

Marketing Strategy Segmentation Positioning Product

Management

Pricing Distribution Marketing

Communications Marketing Research

Market Segmentation  Market Segment It consist of a large identifiable group within a market with similar wants purchasing power, geographical location and buying attitudes or habits

Levels of Segmentation  Niche Marketing  Local Marketing  Individual Marketing

Patterns of Market Segmentation  Homogeneous Preferences  Diffused Preferences  Clustered Preferences

Market Segmentation Procedure  Survey Stage  Analysis Stage  Profiling Stage

Bases for Segmenting Market  Geographic  Demographic  Psychographics  Behavioral

Characteristics of Effective Segmentation  Measurable  Substantial  Accessible  Differentiable  Actionable

Product Positioning It is the act of designing the company’s offering and image to occupy a distinctive place in the target market

Major Positioning Errors  Under positioning  Over positioning  Confused positioning  Doubtful positioning

Differentiation It is the act of designing a set of meaningful differences to distinguish the company’s offering from competitor’s offerings

Dimensions/Basis of Differentiation  Product  Services  Personnel  Channel  Image

Basis of Differentiation Product

Image

Service Channel

Personnel

Product Differentiation  Form  Features  Performance  Conformance  Durability  Reliability  Repair ability  Style & Design

Product Differentiation Form

Features

Product

Performance

Reliability

Conformance

Style & Design 4-103

Service Differentiation  Ordering Ease  Delivery  Installation  Customer Training  Customer Consulting  Maintenance and Repair  Miscellaneous

Service Differentiation Ordering Ease

Customer Training

Delivery

Service

Warrantee/ Guarantee

Customer Consultation

Miscellaneous 4-103

Personnel Differentiation  Competence  Courtesy  Credibility  Reliability  Responsiveness  Communication

Personnel Differentiation Personnel Differentiation Competence

Credibility

Courtesy

Personnel

Responsiveness

Reliability

Communication

4-103

Channel Differentiation  Coverage  Expertise  Performance

Channel Differentiation

Channel

Coverage

Expertise

Performance

Image Differentiation  Symbols  Media  Atmosphere  Events

Image Differentiation Image

Symbols

Media

Atmosphere

Events

Criteria for Worthful Differentiation  Important  Distinctive  Superior  Communicable  Pre-emptive  Affordable  Profitable

Product A product is anything that can be offered to a market to satisfy a want or need. It include goods, services, experiences, events, persons, places, properties, organizations, information and Ideas.

Product Life Cycle  Introduction  Growth  Maturity  Decline

Product Levels  Core Benefit  Basic Product  Expected Product  Augmented Product  Potential Product

Product Hierarchy  Need Family  Product Family  Product Class  Product Line  Product Type  Brand Name  Item

Product Classifications  Durability and Tangibility  Consumer Goods  Industrial Goods

Durability and Tangibility  Non-durable goods  Durable goods  Services

Consumer Goods Classification  Convenience goods  Shopping goods  Specialty goods  Unsought goods

Industrial Goods Classification  Materials and Parts  Capital Items  Supplies and Business Services

Product Mix It is the set of all products and items that a particular seller offers for sale. A product mix has its Width Length Depth Consistency

Product Line Decisions  Line Stretching Down-market Stretching Up-market Stretching Two-Way Stretching

 Line Filling  Line Modernization  Line Featuring & Line Pruning

Branding  Brand It is a name, term, sign, symbol, design, or a combination of them, intended to identify the goods or services of one seller and to differentiate them from competitors

Meanings Conveyed by Brand  Attributes  Benefits  Values  Culture  Personality  User

Advantages of Branding  Easy Selling  Legal Protection  Customer Loyalty  Easy Market Segmentation  Image Building

Brand Sponsor Decision  Manufacturer Brand  Distributor Brand  Licensed Brand

Brand Name Decision  Individual Name  Blanket Family Name  Separate Family Names for all products  Company Trade Name combined with Individual Product Names

Brand Strategy Decision  Line Extension  Brand Extension  Multi-brands  New Brand  Co-brands

Packaging It includes the activities of designing and producing the container for a product

Levels of Packaging  Primary  Secondary  Shipping

Advantages of Packaging  Self Service  Consumer Affluence  Company and brand image  Innovation Opportunity

Labeling It may be a simple tag attached to the product or an elaborately designed graphic that is part of the package

Functions of Label  Identification  Grading  Description  Promotion

Service It is any act or performance that one party can offer to another that is essentially intangible and does not result in the ownership of anything. Its production may or may not be tied to a physical product.

Categories of Service Mix  Pure Tangible Good  Tangible Good with Accompanying Service  Hybrid  Major Service with Accompanying Minor Goods  Pure Service

Characteristics of Services  Intangibility  Inseparability  Variability  Perishability

Elements/Tools of Service Marketing Approach  Product  Price  Promotion  Placement  People  Physical Evidence  Process

Marketing Strategy for Service Firms  External Marketing  Internal Marketing  Interactive Marketing

Tasks of Service Companies  Managing Differentiation Offer Delivery

Image  Service Quality  Productivity

Determinants of Quality  Reliability  Responsiveness  Assurance  Empathy  Tangibles

Common Features of Excellent Service Companies  Strategic Concept  Top Management Commitment  High Standards  Monitoring Systems  Satisfying Customer Complaints  Employees Satisfaction

Designing The Pricing Strategies  Pricing Objectives  Pricing Method  Promotional Pricing  Discriminatory Pricing  Product Mix Pricing

Setting Pricing Objective  Survival  Maximum Current Profit  Maximum Market Share  Maximum Market Skimming  Product Quality Leadership

Selecting a Pricing Method  Markup Pricing  Target Return Pricing  Perceived Value Pricing  Value Pricing  Going-rate Pricing  Sealed Bid Pricing  Psychological Pricing

Price Discounts and Allowances  Cash Discounts  Quantity Discounts  Functional/Trade Discounts  Seasonal Discounts  Allowances

Promotional Pricing  Loss-Leader Pricing  Special Event Pricing  Cash Rebates  Low Interest Financing  Longer Payment Terms  Warranties and Service Contracts  Psychological Discounting

Discriminatory Pricing  Customer-Segment Pricing  Product-form Pricing  Image Pricing  Location Pricing  Time Pricing

Product Mix Pricing  Product Line Pricing  Optional Feature Pricing  Captive Product Pricing  Two Part Pricing  By Product Pricing  Product Bundling Pricing

Initiating and Responding to Price Changes  Initiating Price Cuts  Initiating Price Increases  Customer Reaction

Responding to Price Change  Maintain Price  Maintain Price and add Value  Reduce Price  Increase Price and Improve Quality  Increase Price  Launch a Low Price Item

Developing Effective Communication  Identify the Target Audience  Determine the Communication Objective  Design the Message  Select the Communication Channel  Allocate Communication Budget  Decide Communication Mix  Measuring the Results

Marketing Communication Mix  Advertising  Sales Promotion  Public Relations  Personal Selling  Direct Marketing

Promotional Objectives  Awareness  Knowledge  Liking  Preference  Conviction  Purchase

Designing The Message  Message Content  Message Structure  Message Format  Message Source

Message Content  Rational Appeals  Emotional Appeals  Moral Appeals

Methods of Establishing Communication Budget  Affordable Method  Percentage of Sales Method  Competitive-Parity Method  Objective and Task Method

Advertising Any paid form of non-personal presentation and promotion of ideas, goods or services by and identified sponsor

Characteristics of Advertising  Public Presentation  Pervasiveness  Amplified Expressiveness  Impersonality

Advertising Objectives  Informative Advertising  Persuasive Advertising  Reminder Advertising

Decision on Advertising Media  Reach  Frequency  Impact

Sales Promotion A variety of short-term incentives to encourage trail or purchase of a product or service

Characteristics of Sales Promotion  Communication  Incentive  Invitation

Sales Promotion Tools  Samples  Coupons  Cash Rebates  Price Packs  Premiums or Gifts  Prizes  Patronage Awards

Sales Promotion Tools  Free Trials  Product Warranties  Tie-in Promotions  Cross Promotions

Public Relations and Publicity A variety of programs designed to promote or protect a company’s image or its individual products

Characteristics of Public Relations and Publicity  High Credibility  Ability to catch buyers off guard  Dramatization

Functions of PR Department  Press Relations  Product Publicity  Corporate Communication  Lobbying  Counseling

Major Tools in Marketing PR  Publications  Events  News  Speeches  Public Service Activities  Identity Media

Objectives of Marketing PR  Build Awareness  Build Credibility  Stimulate the Sales Force and Dealers  Hold Down Promotion Costs

Personal Selling Face to face interaction with one or more prospective purchasers for the purpose of making presentations, answering questions and procuring orders

Characteristics of Personal Selling  Personal Confrontation  Cultivation  Response

Tasks of Sales Force  Prospecting  Targeting  Communicating  Selling  Servicing  Information Gathering  Allocating

Sales Force Structure  Territorial  Product  Market  Complex

Principles of Personal Selling  Professionalism  Negotiation  Relationship Marketing

Direct Marketing It is an interactive marketing system that uses one or more advertising media to effect a measurable response or transaction at any time.

Characteristics of Direct Marketing  Nonpublic  Customized  Up-to-date  Interactive

Benefits of Direct Marketing  Time Saving  Easy Access to Information  Ordering Ease  Better Relationships  Less Cost

Tools of Direct Marketing  Mail  Telephone  Fax  E-mail  Internet  Catalog Marketing  Telemarketing

Placement-Value Delivery Network The network made up of the company, suppliers, distributors and ultimately customers who partner with each other to improve the performance of the entire system

Marketing Channels A set of independent organizations involved in the process of making a product or service available for use or consumption by the consumer or business user

Functions of Marketing Channels  Information  Promotion  Contact  Matching  Negotiation  Physical Distribution

Functions of Marketing Channels  Financing  Risk Taking

Channel Level A layer of intermediaries that performs some work in bringing the product and its ownerships closer to the final buyer

Level of Channels  Direct Marketing Channels  Indirect Marketing Channels

Direct Marketing Channel A marketing channel that has no intermediary levels, the company sells directly to consumers

Indirect Marketing Channel A channel containing one or more intermediary levels is called indirect marketing channel

Types of Marketing Channels  Conventional Distribution Channel  Vertical Marketing System  Horizontal Marketing System  Multi-channel or Distribution System

Hybrid

Conventional Marketing System A channel consisting of one or more independent producers, wholesalers and retailers, each a separate business seeking to maximize its own profits even at the expense of profits for the system as a whole

Vertical Marketing System A distribution channel structure in which producers, wholesalers and retailers act as a unified system. One channel member owns the others, has contracts with them or has so much power that they all cooperate.

Types of VMS  Corporate VMS  Contractual VMS  Administered VMS

Corporate VMS A VMS that combines successive stages of production and distribution under single ownershipchannel leadership is established through common ownership

Contractual VMS A VMS in which independent firms at different levels of production and distribution join together through contracts to obtain more economies or sales impact than they could achieve alone

Administered VMS A VMS that coordinates successive stages of production and distribution not through common ownership or contractual ties but through the size and power of one of the parties.

Horizontal Marketing System A channel arrangement in which two or more companies at one level join together to follow a new marketing opportunity

Multi-channel or Hybrid Distribution System A distribution system in which a single firm sets up two or more marketing channels to reach one or more customer segments

Marketing Intermediaries Strategies  Intensive Distribution  Exclusive Distribution  Selective Distribution

Major Logistics Functions  Warehousing  Inventory Management  Transportation  Logistic Information Management

Marketing Information Systems  Marketing Research What

is Marketing Research? Process Terminology Techniques

 MKIS - Marketing Information Systems What

is MKIS Components of an electronic MKIS

Marketing Research ‘The systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services’ American Marketing Association

The Marketing Research Process  Set objectives  Define research Problem  Assess the value of the research  Construct a research proposal  Specify data collection method  Specify techniques of measurement  Select the sample

The Marketing Research Process  Data collection  Analysis of results  Present in a final report

Terminology of Marketing Research  Primary data - collected firsthand  Secondary data - already exists, desk research  Quantitative research - statistical basis  Qualitative research - subjective and personal  sampling - studying part of a ‘population’ to learn about the whole

Marketing Research Techniques  Interviews face-to-face telephone postal

questionnaire

 Attitude measurement cognitive

component (know/believe about an act/object) affective component (feel about an act/object) co native component (behave towards an object or act)

Marketing Research Techniques  Group discussion and focus group  Postal research questionnaires  Diary panels - sources of continuous data  In-home scanning - hand-held light pen to scan barcodes  Telephone research  Observation

What is MKIS? ‘MKIS (MIS) is a set of procedures and methods for the regular, planned collection, analysis and presentation of information for use in marketing decisions’ American Marketing Association

The Components of a Computerised MKIS Data Bank

Statistical Bank

MKIS

Model Bank

Display unit

Marketing Manager

The Components of a Computerised MKIS  Data bank - raw data e.g historical sales data, secondary data  Statistical bank - programmes to carryout sales forecasts, spending projections  A model bank - stores marketing models e.g Inventory Model, Boston Matrix  Display unit - VDU and keyboard