Introduction to Marketing Management

The Nature of Marketing

What is Marketing?

An art A science A business function A process A relationship A system

What is Marketing?
Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

What is Marketing Management?

Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.

For an exchange to occur..

There are at least two parties. Each party has something that might be of value to the other party. Each party is capable of communication and delivery. Each party is free to reject the exchange offer. Each party believes it is appropriate or desirable to deal with the other party.

What is Marketed?
Goods Services Events Experiences Persons Places Properties Organization information ideas

Demand States
Negative Nonexistent Latent Declining Irregular Unwholesome Full Overfull

Key Customer Markets

Consumer markets Business markets Global markets Nonprofit/Government markets

Company Orientations
Production Product Selling Marketing

Marketing Mix and the Customer

Four Ps Product Price Place Promotion

Marketing Mix and the Customer

Four Cs Customer solution Customer cost Convenience Communication

Key Customer Markets

Consumer markets Business markets Global markets Nonprofit/Government markets

Core Concepts of Marketing

Target Markets & Segmentation

Needs, Wants, and Demands

Product or Offering Value and Satisfaction Exchange and Transactions Relationships and Networks Marketing Channels Supply Chain Competition

Marketing Environment

The Nature of Marketing

What is the Purpose of Marketing?
Satisfaction

Functional Satisfaction
Psychological Satisfaction

Adding Degrees of Satisfaction

Possession utility Place utility Time utility
Form utility Calpol
Store has it in stock Delivered to your home Pay with your VISA card

The Nature of Marketing

What is the Purpose of Marketing?
Satisfaction Functional Satisfaction Psychological Satisfaction The Four Utilities Consumer Problems Providing Benefit Bundles Offering a Total Consumption System

Simple Marketing System

Communication

Industry (a collection of sellers)

Goods/services Money

Market (a collection of Buyers)

Information

A Three-Way Exchange
Parental recognition, Sense of pride

Parent
Tuition, donations

College or University
Tuition, labor (work study), class attendance

Money, encouragement

Appreciation, grades, feeling of accomplishment

Student
Education, personal growth, sense of independence and spirit

Levi Strauss Value-Delivery Network

Order Order Order Jobber Delivery Order

Manufacturer

Whole seller

Retail outlet

Customer

Delivery

Delivery

Delivery

Competition is between networks, not companies. The winner is the company with the better network.

The History of Marketing

The Four Eras
The Production Era ProductEra The Sales Era The Marketing Era

The New Eras

Non-Business Marketing Strategic Marketing Social Responsibility

The Marketing Mix

The Four Ps The Four Cs

Marketing Mix Product

Place
ConvenPromotion ience Communication

Customer Solution

Price

Customer Cost

Marketing Management in the Organization

Marketing and the Organizational System
What Are the Functions in the Organizational Profit Pipeline? Accounting Finance Human Resources Marketing Research & Development/Production

Marketing Management in the Organization

Which Organizational Function is the Most Important?
None is More Important

Which Organizational Function Comes First?

Marketingand It Comes Last as Well

The Processing Pipeline

Marketing

Marketing

Inputs
Capital, Machines, Raw Materials, Labor, Technology, Information, Time, Effort

Outputs
Goods/ Services, Sales (revenue), Market share, Profits, Information

Evolving Views of Marketings Role

Production Marketing
Customer

The customer as the controlling function and marketing as the integrative function

Traditional Organization Chart

Top Management

Middle Management
Front-line people Customers

Customer-Oriented Organization Chart

Customers
Front-line people Middle management

Top management

Customer Development
Suspects

Prospects customers customers

First-time

Repeat

Clients Advocates Partners

Disqualified prospects

Inactive or ex-customers

The Profit Triangle

Profit
Competitive advantage

Quality

#1

Quality is the totality of features and characteristics of a product or service that bear on its ability to satisfy stated or implied needs.

Structure of Flows
Resources Money

Resource markets
Taxes, goods

Resources Money

Manufacturer markets

Services, money Services, money

Taxes

Taxes, goods Services, money

Government markets
Services Taxes, goods

Consumer markets

Money Goods, services

Intermediary markets Goods, services

Money

Steps in Segmentation, Targeting, and Positioning

6. Develop Marketing Mix for Each Target Segment 5. Develop Positioning for Each Target Segment 4. Select Target Segment(s) 3. Develop Measures of Segment Attractiveness 2. Develop Profiles of Resulting Segments
1. Identify the basis for e 2. segmentations

Market Positioning Market Targeting

Market Segmentation

Market Segmentation Levels of Market Segmentation

Mass Marketing

Same product to all consumers (no segmentation)

Segment Marketing

Different products to one or more segments (some segmentation)

Niche Marketing

Different products to subgroups within segments ( more segmentation)

Micromarketing

roducts to suit the tastes of individuals or locations (complete segmentation)

Segmentation
Market segmentation is the process of dividing a heterogeneous market into homogenous sub units. Need for segmentation To be able to compete in a highly competitive market. To position itself as segment leader. To gain competitive edge.

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BASES FOR SEGMENTING THE MARKET

(a) Customer based segmentation (b) Product related segmentation (c) Competition related segmentation

Customer Based Segmentation Geographic location of customers:

RURAL vs. URBAN METRO vs. NON METRO

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 Demographic Characteristic Age Sex Child Pester Power Youth Market Income Occupation Gender Education Marital Status Family Size & Structure Psychographic Variables Life Style Personality Buyer Readiness

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Product Related Segmentation

Product Use situations Different customers may use the same product in different situations.

Benefits Segmentation Marketers identifies benefits that a customer looks for when buying a product. Quantity consumed- one of the basis of segmentation beverages tea ,coffee,soft drinks,liquor and cigarette markets.Following segments are visible

a) Heavy users
b) Moderate users
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c) Light users

Product Related Segmentation

Decision Criteria Used by customer to evaluate and buy a brand or the product. Following four parameters are considered in consumer decision making today Price Perceived quality of the product/ service Service offered by the firm Technology

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Competition Based Segmentation

Hard Core Loyal
Soft Core Loyals Switchers

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Three Stages of Market Segmentation

1) 2) Survey Stage- Divided into two partsFocus group discussions & in depth interviews with a view to getting an insight into consumer motivation,attitudes and behavior. Based on this insight, developing a questionnaire for a sample group of customers. Analysis Stage using factor analysis. Identifying factors that differentiate customer groups. Profiling Stage- Each cluster is profiled in terms of demographics, psychographics, media habits,attitudes,behavior and consumption habits.

a) b) c) d)

Requirements for Effective SegmentationAccessibility Measurable Viable Intensity in Competition.

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Business Level Strategy

Generic Strategies
Michael Porter identified three generic strategies that can be implemented at the business unit level

 Market Place
Market Space Meta market

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Holistic Marketing
Internal marketing Integrated Marketing CSR Relationship Marketing

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Market Research
Define the research objective Develop the research plan Collect the information Analyze the information Present the findings Make the decision

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Research approaches
Observational research Focus group research Survey research Experimental research

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Types of questions
Dichotomous Multiple choice Likert scale Semantic Differential Importance scale Rating scale Intention to buy scale

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CUSTOMER DERIVED VALUE

The consumer considers the net value which is the excess of total customer value given by a product over the total customer cost. CUSTOMER
DERIVED VALUE =

Total customer value

Total customer cost

CDV-Total Customer Value

Total Customer Value

=
Product Value

Service Value

Personnel Value

Image Value

CDV-Total Customer Value

Product Value: It is given by its performance, reliability, longevity and special characteristics.
Service Value : It represent for example ,treatment unavailable elsewhere, lower interest rates, express sanctioning of loans for credit card holders. Personnel Value : The speed with which response is given. Image Value: It associates a product with symbols and facilitators that surrounds a product.

CDV-Total Customer Cost

Total Customer Cost

=
Monetary Price

Time Cost

Energy Cost

Psychic Cost

VALUE CHAIN
Value Chain is a tool used to identify ways of creating higher customer value

Value Delivery Process

Choose the Value : Customer Segmentation, Market Selection / focus, Value positioning Provide the value : Product Development, Service Development, Pricing, Sourcing, Making, Distribution, Servicing Communicate the value : Sales force, Sales promotion, Advertising

CUSTOMER PROFITABILITY ANALYSIS

Profitable customer is a person, household or company that over time yields a revenue stream that exceeds the company's cost stream of attracting, selling & servicing a customer

CPA = Revenues from customer Total Costs*

* Includes cost of mfg, mktg, S&D, telephone calls, traveling, discounts, gifts, entertainment etc

CUSTOMER PROFITABILITY ANALYSIS

Customer Product grid

Stimu lus Company Controlled Product Price Consu mer Mind Sales Promotion Social Display Word of Mouth Distribution (Black Box)

Buy

Advtg

Respon se No Buy
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Customers Today
Drivers of Change

Media

Technology (eg. Developments in Medical Sciences, Genetics, Bio technology, Computers, Virtual Technologies etc.)
Influence CUSTOMER Impact

Borderless Competition

Influence

Influence

Awareness

Values: eg. Defer Pleasure & consumption vs. Instant Pleasure & Consumption

Social Structures: Individualism vs. Collectivism; Breaking up of Groups, Individual Identity, Role of Opinion, Leadership

Personality: Assertiveness? Exhibitionism? Perceived Selfconcept (!) Lifestyle Aspirational (!)

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Decision Making Process

Need Recognition/Problem Identification Development of Decision Criteria

Search for Alternatives

Evaluation of Alternatives Decision High Involvement Products
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Types of Buying Situations

Routinised response behaviour- Straight Rebuy Limited problem solving and- Modified Rebuy Extensive problem solving- New Task

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Buyer Motivators
Economic Factors Human beings being rational individuals evaluates various alternatives and will buy or select those where the marginal utility is more than the marginal price he or she paid for it. Psychological Factors- These are Motivation / Learning / Perception Motivation According to Sigmund Freud-man learns from his environment. Several theories are used to understand motivation levels Maslows need hierarchy theory Herzbergs two factor theory McClellands Theory of Achievement Motivation

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Total

Set
(All Brands)

Awareness Set (Brands Aware of)

Consideration Set (Brands considered)

Decision Set (Brand Decided) Purchase Set

Theory of Evoked Set

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Categorisation of Customer based on life styles:

1. Survivors: These are disadvantaged people who tend to be despairing, depressed and withdrawn 2. Sustainers: are disadvantaged people who are valiantly struggling to get out of poverty. 3. Belongers: are individuals who are conventional, conservative, nostalgic and unexperimental and who would rather fit in than stand out. 4. Emulators: are ambitious, upwardly mobile and status conscious; they want to make it big. 5. Achievers: are the nations leaders, who make things happen, work within the system and enjoy the good life.
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Experiential Marketing
Analyze the experiential world of the customer Building the experiential platform Designing the experience Structuring the customer interface Engaging in continuous innovation

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Steps in segmentation process

Need based segmentation Segment attractiveness Segment profitability Segment positioning Marketing mix strategy

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Target marketing strategies

Single segment concentration Selective specialization Product specialization Market specialization Full market coverage

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Positioning
Product Service Channel Price People Image

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Tasks in Positioning
Deciding the locus in consumers mind Analyzing the competitors positioning Fixing the differentiation plank Ensuring the competitive advantage for delivering the promise Developing the value proposition Communicating the value proposition to the customers Monitoring how the positioning is fairing in the market Repositioning if required

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Levels of strategies

Corporate Level Strategy

The Corporate Portfolio Framework An Approach to corporate level strategy advocated by the Boston Consulting Group , also known as the BCG Matrix

 Five Forces Corporate strategy Another well known approach to corporate strategy is Michael Porters Five Force Model An organization's ability to compete in a given market is determined by the five environmental forces which threatens the organizations venture into the new market.

Business Level Strategy

Generic Strategies
Michael Porter identified three generic strategies that can be implemented at the business unit level

Corporate & Division strategic planning

Defining the corporate mission Establishing sbus Assigning resources to sbu Assessing growth opportunities

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Business unit strategic planning

Business mission SWOT Goal formulation Strategy formulation Program formulation Implementation Control

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Product plan/ Marketing Plan

Executive summary Situation analysis Marketing strategy Financial projection Implantation & control

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Customer analysis
Who are the consumers of the firm According to firm what need it serves to consumers According to consumers what need does it serve Is there any gap in these two perceptions What benefits do customer look for in the product What is their priority benefit Customers assessment of the value Purchasing power of the consumer Buying motives, buying habits Personality traits & lifestyle Brand loyalty Brand Switching behavior Who among the competition remained closest to the customers.
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