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MARKETING MANAGEMENT INTRODUCTION What is marketing?

All the acts of firms/managers to identify and translate customer needs into utility to earn profits through their satisfaction.

• The main thrust is CUSTOMER SATISFACTION But why customers are so important for every firm?  Tough competition  Customers are aware of quality, variety, price and other products in the market  They are the main source of demand and henceforth the revenue and profits. DEMAND

SELL

REVENUE

PROFITS

 Modern-day firms are turning to be more and more customer- oriented and customer- centric  Therefore customer

is the king.

FIRM 1

FIRM 2 CUSTOMER

FIRM 4

FIRM 3

• To win this battle , firms resort to an INNOVATIVE, CREATIVE and COMMUNICATIVE process of

MARKETING

MARKETING DEFINED • "The management process which identifies, anticipates and supplies customer requirements efficiently and profitably" - Chartered Institute of Marketing (Focus is on customers. Profits result from meeting customers’ needs effectively and efficiently)

MARKETING DEFINED contd. • “A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.” - Philip Kotler and Gary Armstrong • “Marketing is the business process by which products are matched with markets and through which transfers of ownership are affected.” -Cundiff and Still • “Marketing is the total system of business activities designed to plan, promote and distribute want satisfying products and services to present and potential customers.” -Stanton

Mktg Diagrammatically substantiated Origin Customers’ Needs, desires demands

Means Firm’s task to Identify these Needs & Translate them Into utility

Products & services

End Earning Profits Through Customers’ satisfaction

Nature/characteristics of marketing • • • • • • • • • • • • • • •

Customer-oriented Must Deliver Value Surrounded by customer needs Part of total environment Affect company strategy Partially a science and an art Information/communication function Exchange function Works as a system Goal-oriented A process-dynamic, social and managerial Creation of utilities- place, time, possession Manager’s intellectual and creative process Guiding element of modern firms Inevitable and continuous task

Scope of marketing • It is an umbrella term that spreads itself to cover a whole set of numerous functions/ activities-all aiming at _______________. ACTIVITIES/FUNCTIONS

Research 1. Marketing Research 2. Product Planning & Development

Exchange 1. Buying & Assembling 2. Selling & Dividing

Physical supply 1. Transportation, 2. Storage or Warehousing 3. Packaging

Facilitating 1. Financing 2. Risk Taking 3. Standardization, Grading or Branding 4. Market Information 5. Salesmanship 6. Advertising 7. Pricing

Importance of marketing • Mktg brings new varieties of goods & servicesaims at creation and delivery of standard of living • Provides wide employment opportunities • It has converted yesterday’s luxuries into today’s necessities • Acts as important multiplier and effective engine of development • Creation of utilities- place, time, possession

Importance of marketing (contd…)

• Satisfies individuals’ and society’s needs at the place and price they desire by: producing goods supplying services fostering innovations

• To realize profit, a sale has to be made. To make the sale, a customer has to be created. To create customer, his needs have to be satisfied. To meet customer needs, marketing is essential. • Mktg is like eyes and ears of business-it keeps the business in CLOSE CONTACT with its environment and informs of events that can influence its operations.

THUS, Marketing – Managing Profitable Customer Relationship. Two Goals – Attract New Customers by promising superior value Keep and Grow Current Customers by delivering satisfaction Broadly, Marketing is a social and managerial process by which individuals and organizations obtain what they need and want. Marketing involves building profitable, value-laden exchange relationships with customers. Marketing is a process by which companies create values for customers and build strong customer relationships in order to capture value from customers in return.

MARKETING PROCESS Understand the marketplace and customer needs and wants

Design a customerdriven marketing strategy

Construct an integrated marketing program that delivers superior value

Build profitable relationships and create customer delight

Capture value from customers to create profits and customer equity

1. Understand the marketplace and customer needs and wants

•Needs, Wants and Demands •Market Offerings •Value and Satisfaction •Exchanges and relationships •Markets

Elements of a Modern Marketing System

Company (marketer) Marketing Intermediaries

Suppliers

Competitors

Major Environmental Forces

Final User

2. Design a Customer-Driven Marketing Strategy

Marketing Management – art & science of choosing target markets and building profitable relationships with them.

To design a winning marketing strategy, marketing manager must address two questions: •What customers to serve (market segmentation and target market) •How to serve these customers best (What is our Value Proposition) Value Proposition- The set of benefits or values it promises to deliver to consumers to satisfy their needs.

Marketing Management Orientations / Corporate orientation towards Marketing

Introduction • Firms vary in their perceptions about business, and have different orientations about marketplace. • This has led to emergence of different concepts of marketing. Some of the noteworthy ones are:

Marketing Management Orientations / Corporate orientation towards Marketing (Contd..) • • • •

The exchange concept The production concept The product concept The selling concept

• The marketing concept • The societal marketing concept

TRADITIONAL

MODERN

Marketing Management Orientations (Contd…)

EXCHANGE CONCEPT

• The central idea of marketing according to this concept is mere exchange of products between seller and the buyer • The main aim is TRANSFER OF OWNERSHIP against some monetary value called PRICE • Outdated and narrow view

Marketing Management Orientations (Contd…) PRODUCTION CONCEPT •

According to this concept, marketing is a mere addition to production.

•

In firms where this ideology is followed, PRODUCTION DOMINATES THE THINKING PROCESS. They believe that marketing can be managed by managing production

•

The concept holds that consumers, as a rule, support those products that are produced in great volume at a low unit cost.

•

All effort is focused on production with an aim to achieve lowest production cost & maximum output

•

Lower cost will automatically bring all customers to their doors.

Marketing Management Orientations (Contd…)

PRODUCT CONCEPT • According to this concept, marketing aims at PRODUCT EXCELLENCE, IMPROVED PRODUCTS, IDEALLY DESIGNED PRODUCTS. • It also incorporates the objective of WINNING MARKETS AND EARNING PROFITS THROUGH PRODUCT QUALITY ASSURANCE • Fails to focus on actual needs of customers despite of emphasizing on product attributes.

Marketing Management Orientations (Contd…)

SELLING CONCEPT • The central idea of marketing according to this concept is SELLING WHAT IS PRODUCED. • The focus of effort is on AGGRESSIVE PROMOTION AND PUSHING OF GOODS IN MARKET. • The tools used are – Heavy advertising High –power personal selling, large scale sales promotion, Heavy price discounts and Strong publicity Companies following selling concept assumes that selling is synonymous to marketing. They aim to sell what they make rather than making what the market wants.

Marketing Management Orientations (Contd…)

MARKETING CONCEPT • According to this concept, business is basically a ‘needsatisfying process’ •

Businesses should be managed keeping in mind CONSUMER and HIS NEEDS as the FOCUS.

• It prescribes that all the goals of business, including profit, must be realized through consumer satisfaction • It is customer centered and not product centered • It is to find the right products for the customer and not right customers for your product.

SELLING vs MKTG •

START

FOCUS

FACTORY

PRODUCTS

MARKET

CUSTOMER NEEDS

MEANS

SELLING

COORDINATED MKTG

ENDS

PROFITS THROUGH SALES

PROFITS THROUGH CUSTOMER SATIS_ FACTION

Marketing Management Orientations (Contd…) SOCIETAL MARKETING CONCEPT •

Focus is on BENEFIT of the SOCIETY AT LARGE

•

Aim is to enhance the standard of living in the society and stress is on long run societal welfare.

•

Keeping a check on : Environmental degradation Preserving resources and environmental quality Pollution,etc. Society (Human Welfare)

Consumers (Want Satisfaction)

Societal Marketing Concept

Company (Profits)

3. Preparing an Integrated Marketing Plan and Program This program is developed to actually deliver the intended value to target market. This program builds customer relationship by transforming the marketing strategy into action. It consists of firm’s marketing mix to implement the strategy. Marketing Mix tools are classified as broad groups called 4Ps of Marketing Product Price Place Promotion

4. Building and Delivering Customer Value/ Relationships Marketing has the main objective of ‘managing profitable customer relationships’ which can be done by two of its primary tasks: >Attracting new customers by promising superior customer value >Keeping (retaining) and growing current customers by delivering satisfaction through continuous value delivery. The common element in both of these is VALUE DELIVERY to earn customer satisfaction. Firm produces utility as per Customers’ requirements

Create satisfaction & Ensure expected Value delivery

Attracting New customers

Retain Current customers

PROFITS & Long-term survival

4. Building and Delivering Customer Value/ Relationships (Contd..)

CONCEPT OF VALUE FOR CUSTOMERS •

Customers’ purchase decisions are guided by the idea of UTILITY i.e., satisfaction derived.

•

‘Value’ represents TOTAL UTILITY plus other benefit- oriented elements (the customer seeks to get in exchange of his money) resulting in a “PACKAGE OF BENEFITS”.

•

This total package/ bundle of benefits exchanged against some monetary amt. for satisfaction is understood as VALUE .

Standard Chartered’s global credit card which can be used across the globe vis-a- vis other banks’ country specific cards.

Godrej has created an inbuilt curd maker in its 400-lts refrigeratorsthe customer is getting value addition at no substantial extra cost.

Mc Donalds offers a bunch of benefits clearly represented in its basic ideologyfood, family, fun

4. Building and Delivering Customer Value/ Relationships (Contd..) Marketing defined in context of VALUE It is the process by which companies CREATE VALUE for customers & BUILD STRONG RELATIONSHIPS in order to CAPTURE VALUE from customers in return. The essence is : building value- laden, profitable exchange relationships with customers. In a nutshell, “if companies take care of the customers by satisfying them and delivering value to them, market share & profits will automatically follow.’’ Why is delivery of customer value imp.? Customer value is directly related to customer satisfaction Helps developing & managing sustained customer relationships This will subsequently lead to long term profitability.

4. Building and Delivering Customer Value/ Relationships (Contd..) Customer Relationship Management – The overall process of building and maintaining profitable customer relationship by delivering superior customer value and satisfaction. Customer Perceived Value: The customer’s evaluation of the difference between all the benefits and all the costs of a market offering relative to those of competing offers. The value can be enhanced by adjusting any element of marketing mix. Larger the value-cost gap, the ___________ is his satisfaction. Customer Satisfaction: The extent to which a product’s perceived performance matches a buyer’s expectations. If product’s performance < Expectations If product’s performance = Expectations If product’s performance > Expectations

Dissatisfied Customer Satisfied Customer Delighted Customer

Customer Delight: promising only what they can deliver, and then delivering more than they promise.

4. Building Customer Relationships (Contd…) Customer Relationship Levels and Tools • Basic relationship with low-margin customers, generally low value routine purchases • Full partnership with key customers, generates long-term and huge profits, huge value purchases Most companies are developing customer loyalty and retention programs Changing Nature of Customer Relationships • Relating with more carefully selected customers Selective Relationship Management • Relating for the long term • Relating Directly

4. Building Customer Relationships (Contd…) Partner Relationship Management Working closely with partners in other company departments and outside the company to jointly bring greater value to customers. Every functional area inside the company is now interacting with the customers. Companies are going for supply chain management, strategic alliance to strengthen their relationships with partners. Marketing is a value creating and value delivering process It involves four steps in the value providing process – 12.Value selection 13.Value creation/value delivery 14. Value communication 15.Value Enhancement

Mktg as a value creating & value delivery process VALUE SELECTION

Firm decides collect feed-

VALUE CREATION

VALUE COMMUNI-CATION

It produces/

VALUE DELIVERY

communicates

VALUE ENHANCE-MENT

actually delive-

“What” it needs -back from

creates value by

value proposition -ring what it

To deliver to customers to

way of desired

thru creative

Customers? enhance,

promised

Goods & services mktg communication

improve its existing offerings

5. Capturing Value from Customers The outcomes of creating customer value • Customer Loyalty and retention Customer Lifetime Value – The value of the entire stream of purchases that a customer would make over a lifetime of patronage. Good CRM

Customer Delight

Loyalty

• Growing share of customer Share of Customer – The portion of the customer’s purchasing that a company gets in its product categories. • Building Customer Equity Customer Equity – Total combined customer lifetime values of all of the company’s customer.

Building the right relationship with the right customer Butterflies Good fit between company’s offerings and customer’s needs; high profit potential

True Friends Good fit between company’s offerings and customer’s needs; highest profit potential

Strangers Little fit between company’s offerings and Low customer’s needs; lowest profit potential

Barnacles Limited fit between company’s offerings and customer’s needs; low profit potential

High POTENTIAL PROFITABILITY

Short-term Customers

Long-term Customers

PROJECTED LOYALTY