Chapter -1 Marketing Management

Introduction to Marketing

SYLLABUS
INTRODUCTION TO MARKETING CONCEPTS. EVOLUTION OF MARKETING & CUSTOMER ORIENTATION. MARKETING ENVIRONMENT & EVALUATION OF MARKETING OPPORTUNITIES. MARKET RESEARCH & MARKETING INFORMATION SYSTEM (MIS) DEMAND FORECASTING & MARKET POTENTIAL ANALYSIS. CONSUMER BUYING PROCESS & ORGANIZATION BUYING BEHAVIOR PILLARS OF MARKETING STPD MARKETING MIX PRODUCT DECISIONS PRODUCT LIFE CYCLE NEW PRODUCT DEVELOPMENT PROCESS DISTRIBUTION DECISIONS LOGISTICS &CHANNEL DECISIONS PROMOTIONS DECISIONS IMC, COMMUNICATIONS CONCEPT, COMMUNICATION TOOLS. PERSONAL SELLING & SALES PROMOTIONS PRICING DECISIONS

 Marketing is the key function of management Marketing is the business function which deals with customers. The simplest definition of marketing : Marketing is managing profitable customer relationship. The twofold goal of marketing to attract new customers by promising superior value & to keep & grow current customers by delivering satisfaction. Example Wal-Mart, Dell Computers These highly successful companies know that they take care of their customers , market share & profits will follow.

 A business organization performs two key functions : Producing goods & services & Making them available to the potential customers for use. The success of organizations business depends upon how efficiently the products &services are delivered to the customers & how differently the customers perceive the difference in delivery in comparison to the competitors. Marketing is responsible for generating revenue & contributing directly towards growth of the organization.

 Finance , operation, accounting & other function will not really matter if there is not sufficient demand for products & services so the company can make profit. Marketing is an art of selling products & services . Marketing is the craft of linking the producers (or potential producers) of a product or service with customers, both existing and potential. Marketing techniques are also applied in politics, religion, personal affairs, and many other aspects of life.

What is Marketing?
Marketing is a societal process by which individuals & groups obtain what they need & want through creating, offering & freely exchanging products & services of value with others. Philip Kotler Marketing is an organizational function & a set of processes for creating, communicating & delivering value to customers & for managing customer relationships in ways that benefit the organization & its stakeholders.-American Marketing Association (AMA)

According to Peter Drucker marketing is

There is one can assume, be need for some selling. But the aim of marketing is to make selling superfluous. The aim of marketing is to know & understand the customer so well that the products & services fits him & sells itself. Ideally, marketing should result in a customer who is ready to buy . All that should be needed then is to make the product or service available.

Core Marketing Concept

Needs wants& demands

Markets

Marketing offers (products services& experiences)

Exchanges , transactions & relationships

Value & satisfaction

Needs Wants& Demands

Needs It is a fundamental concept underlying all marketing activities. What are customer needs& wants? A need is a basic requirement that an individual wishes to satisfy. People have basic needs for food, water, shelter, affection, self development. Many of these needs are created human biology & the nature of social relationships. Customer needs are very broad.

Wants Customer wants are narrow. A want is a desire for a specific product or service to satisfy underlying need. Customers need to eat when they are hungry. What they want to eat & in what kind of environment will vary enormously. Consumer wants are shaped up by social & cultural forces, the media & marketing activities of business. This leads to another important concept customer demand.

Demands Customer demand is a want for specific product supported by ability, & willingness to pay for it. Business therefore have not only to make products that consumer wants, but they also have to make them affordable to a sufficient number to create profitable demand.

 Businesses do not create customer needs or social status in which customer needs are influenced. But business does try to influence demand by developing products & services are Attractive Work well, Are affordable, Are available, Business also tries to communicate the relevant feature of their products through advertising at other marketing promotions.

Example Need : transportation the MBA student has to reach college in time. Buses are not dependable. Want : the students wants a motorcycle, which looks grand , has many latest features & is dependable, Demand : purchasing power is provided by the students parents , who has the willingness to buy the bike , which their ward wants.

Marketing Offers
Marketing offers are combinations of products, services,information, or experiences offered to a market to satisfy a need or want. It is also called as a value proposition , which is a set of benefits that marketing people promise to the consumers to satisfy their needs. The largest share of marketing offers consists of physical products which includes non-durable goods & consumer durables. Marketing offers are not limited to physical products only but are also extended to services, activities or benefits offered for sale that are essentially intangible & do not result in the ownership of anything, example banking, airline, hotel, travel & tourism, consultancy. Marketing offers also includes other entities, such as persons, places, organizations, information & ideas.

Customer Value
Customers have wide choice of products & services & they decide their choices based on their perceptions of the value & satisfaction that different products & services deliver , or offer. Customer value is a difference between the value the customer gains from buying & using a product & the cost of buying the product. This forms the expectations about the value of different marketing offers & buy accordingly. This involves the customers mental process of judging the value of the product & is called customer perceived value. The main task of marketing to create & deliver value. Marketing offers are value propositions promising benefits & value.

Customer Satisfaction
Customer Satisfaction depends on how well the product s performance lives up to the customers expectations. It is a key influence on the future buying behaviour of the people. Customer value & customer satisfaction are the key building blocks for developing & managing customer relationships.

Exchanges
It is a act of obtaining an object which one needs from another by offering some other thing in return. In the exchange process, two or more individuals are involved , each side possessing something that is considered to be of value to the other. Marketing occurs when individuals decide to satisfy needs &wants through exchange.

Transactions
When two identities reach an agreement on terms of exchange it becomes transaction. A transaction will consist of an exchange of values between the two or more parties involved & ownership also changes hands between the seller & the buyer.

Relationships
He marketer wants the customer to be fully satisfied with the transaction so that a long term relationship can be built up in the form of customer loyalty. Marketing consist of actions taken to built & maintain desirable exchange relationships with target audiences involving a product, service, idea, or other object. Beyond simply attracting new customers & creating transactions , the goal of marketing is to retain customers & grow their business with the company.

Market
Market is a set of actual & potential buyers of a product. A market is a place where buyers & sellers meet to buy or sell products . Market refers to the different groups of consumers for a product or services. The size of market will depend on the number of people who exhibit the need , have the buying power, are willing to exchange their resources for what they want.

 Market can be defined as a set of consumers, potential consumers, past consumers, sellers, resellers & intermediateries who are either involved in the process of exchange or are in the process of getting involved in an exchange process.

Depending on the focus of marketer , the markets are classified as Consumer markets, Industrial markets, Non profit markets International markets

Marketing as a Function
Environment
Company or Marketer
Customers Or End-users

suppliers

Marketing Intermediaries

Competitors

 Marketing means managing markets to bring about profitable exchange relationship by creating value & satisfying needs & wants. Marketing involves activities such as searching for customers ,product development, market research, communication, sales promotions, distribution, channel management, service etc. The suppliers provide raw materials to produce goods. The company or marketer & its competitor send their offers & communication to customer directly or through marketing intermediaries.

 The customer compares the values & satisfaction offered in each product/service &decides to buy. All these actors in the marketing system can be affected by environmental forces. A company's success in marketing as a function depends on how well entire system serves the needs of final customers.

The environmental forces includes

Demographic, Economic, Technical, Political, Social, Cultural, Legal

Marketing Orientations or Concepts

The marketing function or activities are conducted by various companies based on alternative concepts or orientations , which are The Production Concept, The Product Concept, The Selling Concept, The Marketing Concept, The Customer Concept, The Societal Marketing concept

Production Concept
Customer will prefer products that are widely available& inexpensive. Managers of production oriented business concentrates on achieving high level of production efficiency, low costs mass distribution. When the demand for a product exceeds the supply , manufacturer have to increase production. When the cost of product is too high the management has to bring it down to affordable levels.

Product Concept
Consumers will favour those products that offer most quality performance, innovative features. Managers in these organizations focus on making superior products & improving them over time. Continuous improvements in product quality are essential for companies that follows this concept.

Selling Concept

Start

Focus
Exceeding Products

Means

End
Profits through sales volume

Factory

Selling & Promoting

Selling Concept
Consumers , if left alone will ordinarily not buy enough of the organizations products . The organization must therefore, undertake & aggressive selling & promotional effort. The aim is to sell what companies make rather than what the market wants. This concept is used for unsought goods which buyers normally do not think of buying like insurance. When companies face excess production , they fellow this concept to sell what they make, without caring for customers needs or satisfaction.

Marketing Concept

Market

customer Needs

Integrated marketing

Profits through customer satisfaction

Start

Focus

Means

Ends

Marketing Concept
Customer centered, sense & response philosophy. The job is to find products for customers, The key is to achieve organizational goals consist of the company being more effective than competitors in creating , delivering & communication superior customer value to its chosen target market. Focus on customer & value is considered the path to successful sales & company profits in this concept. The customer considered THE KING , & the company produces & markets what the customer wants.

The components of marketing concept are as under:

Satisfaction of Customers: In the modern era, the customer is the focus of the organization. The organization should aim at producing those goods and services, which will lead to satisfaction of customers. Integrated marketing: The functions of production, finance and marketing should be integrated to satisfy the needs and expectations of customers. Profitable sales volume: Marketing is successful only when it is capable of maximizing profitable sales and achieves long-run customer satisfaction.

MARKETING VERSUS SELLING

The basic difference between marketing and selling lies in the attitude towards business. The selling concept takes an inside-out perspective. It starts with the factory, focuses on the companys existing products, and calls for heavy selling and promoting to produce profitable sales. The marketing concept takes an outside-in perspective. It starts with a well-defined market, focuses on customer needs, coordinates all the activities that will affect customers, and produces profits through creating customer satisfaction.

MARKETING VERSUS SELLING

Marketing
Focuses on Customers needs. Customer enjoys supreme importance. Converting customers needs into product. Profits through customer satisfaction. Emphasis is given on product planning and development to match products with the market. Integrated approach to marketing is practiced. The principle of caveat vendor (let the seller beware) is followed.

Selling
Focuses on sellers needs. Product enjoys supreme importance. Converting product into cash. Profits through sales volume. Emphasis is placed on sale of products already produced. Fragmented approach to selling is practiced. The principle of caveat emptor (let the buyer beware) is followed.

Difference Between Sales and Marketing

 Marketing is everything that you do to reach and persuade prospects. The sales process is everything that you do to close the sale and get a signed agreement or contract. Both are necessities to the success of a business.

 Marketing and sales functions are diverse yet very interdependent. Typically sales cannot exceed revenue objectives without an effective marketing planning and support, and marketing directives ultimately becomes useless without sales to implement the plan. For small businesses, with limited resources, often there is no practical difference in marketing and sales functions, all revenue generating activities are typically implemented by the same personnel.

 To a pure marketer, the marketing role in a company is not just a business function, but a business philosophy. An effective marketer truly believes dominating their target market is owning their market. The more a marketer can do to maintain market leadership the more effective they are perceived within the organization and within the industry.

Many mistakenly think that selling and marketing are the same - they aren't. The marketing process is broad and includes all of the following: Discovering what product, service or idea customers want. Producing a product with the appropriate features and quality. Pricing the product correctly. Promoting the product; spreading the word about why customers should buy it. Selling and delivering the product into the hands of the customer.

 Selling is one activity of the entire marketing process. Selling is the act of persuading or influencing a customer to buy (actually exchange something of value for) a product or service.

 Marketing activities support sales efforts. Actually, they are usually the most significant force in stimulating sales. Oftentimes, marketing activities (like the production of marketing materials and catchy packaging) must occur before a sale can be made; they sometimes follow the sale as well, to pave the way for future sales and referrals.