MARKETING MANAGEMENT

Unit 1
 Introduction

Main objective of any business

organization is to satisfy the needs and
wants of the society
Production or purchase is of no meaning if
a firm is unable to market its goods and
services
Marketing is the focal point of all business
activities
 Introduction
Marketing is an ancient art & is everywhere.
Formally or informally, people &
organizations engage in a vast numbers of
activities that could be called marketing.
Good marketing has become an increasingly
vital ingredient for business success.
It is embedded in everything we do- from the
clothes we wear, to the web sites we click on,
to the ads we see.
 Marketing Defined
The term Marketing has been derived
from the word Market
Market is a place or geographical area
where buyers and sellers meet and enter
into transactions involving transfer of
ownership of goods and services
 Marketing Defined
Traditional View
Performance of business activities that
direct the flow of goods and services from
producers to consumers or users
Modern View
A business process through which
products are matched with the markets
and through which transfer of ownerships
are effected
 Marketing Defined
The American Marketing Association has
defined marketing as an organizational
function & a set of processes for creating,
communicating & delivering value to the
customers & for managing customer
relationships so as to benefit the
organization & the stake holders.
 Marketing Defined
The process by which companies create value
for customers and build strong customer
relationships in order to capture value from
customers in return.

According to Philip Kotler, Marketing is a

social process by which individuals and groups
obtain what they need and want through
creating, offering, freely exchanging products
and services of value with others
What are Consumers Needs,
Wants, and Demands?
Needs - state of felt
deprivation including
physical, social, and
individual needs i.e
hunger
Wants - form that a
human need takes as
shaped by culture and
individual personality
i.e. bread
Demands - human
wants backed by
buying power i.e.
 NATURE OF MARKETING
Exchange is the essence of marketing.
Marketing is customer/ consumer oriented.
Marketing starts and ends with customers/ consumers.
Modern marketing precedes and succeeds production.
Marketing is goal oriented and the goal being profit maximization
through satisfaction of human needs.
Marketing is a science as well as an art.
Marketing is the guiding element of business (It tells what, when,
how to produce; Marketing is capable of guiding and controlling
business.
Marketing is a system .
Marketing is a process, i.e., series of interrelated functions.
 Scope of Marketing
Marketing has a very wide scope it covers all the activities from conception of
ideas to realization of profits. Some of them as discussed as below:
Study of Consumer Wants and Needs: Goods are produced to satisfy
consumer wants. Therefore study is done to identify consumer needs and
wants. These needs and wants motivates consumer to purchase.
Study of Consumer behaviour: Marketers performs study of consumer
behaviour. Analysis of buyer behaviour helps marketer in market segmentation
and targeting.
Product Planning and development : It includes the activities of product
research, marketing research, market segmentation, product development,
determination of the attributes, quantity and quality of the products.
Branding: Branding of products is adopted by many reputed enterprises to
make their products popular among their customer and for many other
benefits. Marketing manager has to take decision regarding the branding
policy, procedures and implementation programs.
Packaging: Packaging is to provide a container or wrapper to the product for
safety, attraction and ease of use and transportation of the product.
 Scope of Marketing
Channels of Distribution: Decision regarding selection of most appropriate channel of
distribution like wholesaling, distribution and retailing is taken by the marketing
manager and sales manager.
Pricing Policies: Marketer has to determine pricing policies for their products. Pricing
policies differs form product to product. It depends on the level of competition, product
life cycle, marketing goals and objectives, etc.
Sales Management: Selling is a part of marketing. Marketing is concerned about all
the selling activities like customer identification, finding customer needs, persuading
customer to buy products, customer service, etc.
Promotion: Promotion includes personal selling, sales promotion, and advertising.
Right promotion mix is crucial in accomplishment of marketing goals.
Finance: Marketing is also concerned about the finance, as for every marketing activity
be it packaging, advertising, sales force budget is fixed and all the activities have to be
completed with in the limit of that budget.
After Sales services: Marketing covers after sales services given to customers,
maintaining good relationships with customers, attending their queries and solving their
problems.
Core Concepts/ Philosophies of
Marketing
Core Concepts/ Philosophies of
Marketing
Exchange Concept holds that the exchange of a
product between seller & buyer is the central idea
of marketing. Exchange is an important part of
marketing, but marketing is a much wider concept.
Production Concept is one of the oldest
concepts in business. It holds that consumers will
prefer products that are widely available &
inexpensive. Manager of production oriented
business concentrate on achieving high
production efficiency low cost & mass distribution.
Core Concepts/ Philosophies of
Marketing
Product Concept holds that consumers
will prefer those products that are high in
quality, performance or innovative
features. Managers in these organization
focus on making superior products &
improving them over time.
Core Concepts/ Philosophies of
Marketing
Selling Concept holds that consumers, if
left alone, will ordinarily not buy enough of
the organizations product and thus the
organization must undertake an
aggressive selling promotion effort for
pushing its products.
It implies selling what is made, rather than
making what can sell.
Core Concepts/ Philosophies of
Marketing
The Marketing concept emerged in the mid 1950s.The
business generally shifted from a product centered, make &
sell philosophy, to a customer centered, sense & respond
philosophy.
The job is not to find the right customers for your product, but to
find right products for your customers.
The marketing concept holds that the key to achieving
organizational goals consists in determining the needs and wants
of target markets and delivering the desired satisfaction more
effectively and efficiently than competitors.
Every department & every worker should think customer & act
customer.
 Core Concepts/ Philosophies of
Marketing
Social or Societal Marketing Concept holds
that the organizations task is to determine the
needs, wants and interests of target markets and
to deliver the desired satisfaction more
effectively and efficiently than competitors in a
way that preserves or enhances the customers'
and the society's well being.
It involves understanding broader concerns & the
ethical, environmental & legal and social context
of marketing activities & programs.
Core Concepts/ Philosophies of
Marketing
The Holistic Marketing Concept is based on the
development, design and implementation of marketing
programs, processes and activities that recognizes their
breadth and inter-dependencies.
Holistic marketing is a marketing philosophy that
believes everything matters and that a business
cannot exist and excel in vacuum.
This is an approach which proposes that marketing
should be looked from a broad and integrated
perspective and not as an isolated management
function.
Components Characterizing
Holistic Marketing
 Difference between
Marketing and Selling
MARKETING
Focuses n customers needs
Customer Enjoys Supreme importance
Product Planning and development to
match products with markets
Converts customers needs into products
Profits through customer satisfaction
Consumers determine the price; price
determines costs
It assumes: Let the seller beware (Caveat It assumes: Let the buyer beware (Caveat
Vendor)
SALES
Focuses on Sellers needs
Product enjoys supreme importance
High pressure selling to sell goods already
produced
Converts products into cash
Profits through sales volume
Cost determines the price
Emptor)
 Marketing Environment
Businesses do not operate in isolation in the
market place.
There are various factors/ forces, that directly or
indirectly influence the organizations business
activities.
All these forces/ factors form the Marketing
Environment of an organization.
The company operates in a complex marketing
environment, consisting of uncontrollable forces,
to which the company must adapt.
 Marketing Environment
Marketing is the sum total of trading forces
operating in a market place, over which a
business has no control, but which shapes the
manner in which the business functions and is
able to satisfy its customers.
A marketing environment is what surrounds and
creates impact on business organizations.
Marketing environment is un-controllable and
ever changing.
 Marketing Environment
The key elements of marketing
environment are as follows :-
Internal Environment,
Micro Environment, and
Macro Environment.
 Internal Environment
The internal environment refers to the forces and actors that are within the
organization and affects its ability to serve its customers.
A Companys marketing system is influenced by its capabilities regarding
production, financial & other factors. Hence, the marketing
management/manager must take into consideration these departments
before finalizing marketing decisions.
It includes marketing managers, sales representatives, marketing budget,
marketing plans, procedures, inventory, logistics, and anything within
organization which affects marketing decisions, and its relationship with its
customers.
The Research & Development Department, the Personnel Department, the
Accounting Department also have an impact on the Marketing
Department.
It is the responsibility of a manager to company-ordinate all department by
setting up unified objectives.
 Micro Environment
The micro environment refers to the forces that
are close to the marketing organization and
directly impact the customer experience.
It includes the organization itself, its suppliers,
marketing intermediaries, customers, markets or
segments, competitors, and publics.
Happenings in micro environment is relatively
controllable for the marketing organization.
 Some Factors in

Micro Environment
Suppliers are the people who provide necessary resources needed to produce goods & services. Policies of the
suppliers have a significant influence over the marketing managers decisions. A company must build cordial & long-
term relationship with suppliers.
Marketing Intermediaries are the people who assist the flow of products from the producers to the consumers; they
include wholesalers, retailers, agents, etc. These people create place & time utility. A company must select an
effective chain of middlemen, so as to make the goods reach the market in time.
Consumers are the center point of all marketing activities. The main aim of production is to meet the demands of the
consumers. Each type of consumer has a unique feature which have to be considered by the marketers before taking
the decisions. otherwise the company is bound to fail in achieving its objectives. A companys marketing strategy is
influenced by its target consumer
Competitors: A prudent marketing manager has to be in constant touch regarding the information relating to the
competitors strategies. He has to identify his competitors strategies, build his plans to overtake them in the market to
attract competitors consumers towards his products.
Public: A Companys obligation is not only to meet the requirements of its customers, but also to satisfy the various
groups. A public is defined as any group that has an actual or potential ability to achieve its objectives. The
significance of the influence of the public on the company can be understood by the fact that almost all companies
maintain a public relation department. A positive interaction with the public increase its goodwill irrespective of the
nature of the public. A company has to maintain cordial relation with all groups, public may or may not be interested in
the company, but the company must be interested in the views of the public.

\
 Macro Environment
Macro environment refers to all forces that are part of
the larger society and affects the micro environment.
It includes demography, economy, politics, culture,
technology, and natural forces.
These are the factors/forces on which the company has
no control. Hence, it has to frame its policies within the
limits set by these forces:
 Some Factors in
Macro Environment
Demography is defined as the statistical study of the human population & its distribution that forms
the market. A company should study the population, its distribution, age composition, status, etc before
deciding the marketing strategies.
Economic Environment: The economic environment affects a consumers purchasing behavior either
by increasing his disposable income or by reducing it. Eg: During the time of inflation, the value of
money comes down. Hence, it is difficult for them to purchase more products.
Physical Environment or Natural Forces: A company has to adopt its policies within the limits set by
nature. A man can improve the nature but cannot find an alternative for it. Nature offers resources, but
in a limited manner. Companies must find the best combination of production for the sake of efficient
utilization of the available resources. Otherwise, they may face acute shortage of resources. Eg:
Petroleum products, power, water, etc.
Technological Factors: Every new invention builds a new market & a new group of customers. A new
technology improves our lifestyle & at the same time creates many problems.
Social & Cultural Factors: Most of us purchase because of the influence of social & cultural factors.
The lifestyle, values, believes, etc are determined among other things by the society in which we live.
Each society has its own culture which shapes our behavior. A marketing manager must study the
society and culture in which he operates and must try to anticipate the changes and new marketing
opportunities.
political Factors includes all laws, government agencies, and groups that influence or limit other
organizations and individuals within a society. It is important for marketers to be aware of these
restrictions as they can be complex and can profoundly affect a firms marketing.
 CUSTOMER SATISFACTION
The most important asset of any organization is its
customers.
Satisfied customers are the lifeblood of any
organization.
Products perceived performance in delivering value
relative to buyers expectations is customer
satisfaction
 Customer Satisfaction
It is the persons feeling of pleasure or
disappointments, resulting from comparing a
products perceived performance (outcome), in
relation to his/ her expectations.

Perceived performance below expectations = dissatisfied customer

Perceived performance meets expectations = satisfied customer
Perceived performance exceeds expectations = delighted customer
Customer Value
Also known as Customer Perceived Value.
It is the difference between the prospective customers evaluation of
all the benefits and all the costs of an offering and the perceived
alternatives.
The perceived worth of the set of benefits received by a customer
in exchange for the total cost of the offering, taking into
consideration available competitive offerings and pricings.
Value is the perception of the benefits associated with a
good, service, or bundle of goods and services (i.e., the
customer benefit package) in relation to what buyers are
willing to pay for them.
Customer Value
 Customer Value
Total customer value is the perceived
monetary value of the bundle or economic,
functional, and psychological benefits
customers expect from a given market offering.
Total customer cost is the bundle of costs
customers expect to incur in evaluating,
obtaining , using, and disposing of the given
marketing offering.

 Example: Customer Value for

Fossil Watch
A customer will derive value from a Fossil Watch, based on following
parameters:
 Concept of Value Chain
Underlying purpose of every organization is to provide
value to its customers and stakeholders.
To analyze the specific activities through which firm
can create competitive advantage, it is useful to model
the firm as a chain of value creating activities.
Value chain can be understood as the entire series of
organizational work activities that add value at each
step, beginning with the processing of raw materials
and ending with finished products in the hands of end
users.
 Concept of Value Chain
Interlinked value-adding activities that convert
inputs into outputs which, in turn, add to
the bottom line and help create competitive
advantage.
Michael Porter identified a set of interrelated
generic activities, which are common to a wide
range of firms, and framed it as a model called
Value Chain.
Michael Porter suggested that the organization is
split into primary activities and support
activities.
Michael Porters Model of Value Chain
 Primary Activities
Porter identified two sets of activities:
Primary activities are directly concerned with
creating and delivering a product. These
activities aim at creating value that exceeds the
cost of providing the product or service, thus
generating a profit margin.
Support Activities facilitate the primary value
chain activities. Support activities assist the
primary activities in helping the organisation
achieve its competitive advantage.
 Primary Activities
Inbound logistics : Refers to goods being obtained from the organization's
suppliers and to be used for producing the end product.
Operations : Process where raw materials and goods are manufactured into
the final product. Value is added to the product at this stage as it moves
through the production line.
Outbound logistics : Once the products have been manufactured they are
ready to be distributed to distribution centers, wholesalers, retailers or
customers. Distribution of finished goods is known as outbound logistics.
Marketing and Sales: Marketing must make sure that the product is
targeted towards the correct customer group. The marketing mix is used to
establish an effective strategy, any competitive advantage is clearly
communicated to the target group through the promotional mix.
Services: After the product/service has been sold what support services
does the organization offer customers? This may come in the form of after
sales training, customer support, repair services, guarantees and warranties.
 Support Activities
Procurement: This department must source raw materials for the business and obtain the
best price for doing so. The challenge for procurement is to obtain the best possible quality
available (on the market) for their budget.

Technology development: The use of technology to obtain a competitive advantage is

very important in todays technological driven environment. This includes research and
development, process automation, and other technology development, used to support the
value chain activities.

Human resource management: These are the activities associated with recruitment,
development and compensation of employees. The organization will have to recruit, train
and develop the correct people for the organization to be successful. Staff will have to be
motivated and paid the market rate if they are to stay with the organization and add value.

Firm infrastructure: Every organization needs to ensure that their finances, legal structure
and management structure work efficiently and helps drive the organization forward.
Inefficient infrastructure is waste resources; could affect the firm's reputation and even
leave it open to fines and sanctions.
 A HOLISTIC MARKETING
ORIENTATION AND CUSTOMER
VALUE
One view of holistic marketing see it as integrating
the value exploration, value creation, and value
delivery activities with the purpose of building long-
term, mutually satisfying relationships and co-
prosperity among key stakeholders.
Holistic marketers thus succeed by managing a
superior value chain that delivers a high level of
product quality, service and speed. They achieve
profitable growth by expanding customer share,
building customer loyalty, and capturing customer
lifetime value.
 A HOLISTIC MARKETING
ORIENTATION AND CUSTOMER
VALUE
Holistic marketers address three key
management questions:
Value exploration
How a company identifies new value opportunities?
Value creation
How a company efficiently creates more promising
new value offerings?
Value delivery
How a company uses its capabilities and infrastructure
to deliver the new value offerings more efficiently?
 THE CENTRAL ROLE OF
STRATEGIC PLANNING
Successful marketing thus requires
capabilities such as understanding,
creating, delivering, capturing, and
sustaining customer value. Only a select
group of companies have historically
stood out as master marketers.
 THE CENTRAL ROLE OF
STRATEGIC PLANNING
SOME EXAMPLES OF MASTER MARKETERS
Amazon.com Electrolux Progressive Insurance
Bang & Olufsen Enterprise Rent-A-Car Ritz-Carlton
Barnes & Noble Google Samsung
Best Buy Harley-Davidson Sony
BMW Honda Southwest Airlines
Borders IKEA Starbucks
Canon LEGO Target
Caterpillar McDonalds Tesco
Club Med Nike Toyota
Costco Nokia Virgin
Disney Nordstrom Walmart
eBay Procter & Gamble Whole Foods
 THE CENTRAL ROLE OF
STRATEGIC PLANNING
These companies focus on the customer and are organized to
respond effectively to changing customer needs. They all have
well-staffed marketing departments, and their other
departments accept that the customer is king.
To ensure they select and execute the right activities,
marketers must give priority to strategic planning in three key
areas:
Managing a companys businesses as an investment portfolio,
Assessing each businesss strength by considering the markets
growth rate and the companys position and fit in that market, and
Establishing a strategy. The company must develop a game plan
for achieving each businesss long-run objectives.
 THE CENTRAL ROLE OF
STRATEGIC PLANNING
Most large companies consist of four
organizational levels
Corporate,
Division,
Business unit, and
Product
 THE CENTRAL ROLE OF
STRATEGIC PLANNING
The marketing plan is the central instrument for
directing and coordinating the marketing effort.
It operates at two levels:
Strategic
tactical
The strategic marketing plan lays out the target
markets and the firms value proposition, based on
an analysis of the best market opportunities.
The tactical marketing plan specifics the
marketing tactics, including product features,
promotion, merchandising, pricing, sales channels,
and service.
 THE CENTRAL ROLE OF
STRATEGIC PLANNING
PLANNING IMPLEMENTING CONTROLLING

Corporate
Corporate planning
planning Organizing
Organizing
Measuring
Measuring results
results

Division
Division planning
planning Implementing
Implementing
Diagnosing
Diagnosing results
results
Business
Business planning
planning

Taking
Taking corrective
corrective
Product
Product planning
planning
action
action
 CORPORATE AND DIVISION
STRATEGIC PLANNING
All corporate headquarters undertake four
planning activities:
Defining the corporate mission
Establishing strategic business units
Assigning resources to each strategic
business unit
Assessing growth opportunities
 DEFINING THE CORPORATE
MISSION
Organizations develop mission statements
to share with managers, employees, and (in
many cases) customers. A clear, thoughtful
mission statement provides a shared sense
of purpose, direction, and opportunity.
Mission statements are at their best when
they reflect a vision, an almost impossible
dream that provides direction for the next
10 to 20 years.
 DEFINING THE CORPORATE
MISSION
Good mission statements have five major
characteristics:
They focus on a limited number of goals.
The statement We want to produce the highest-
quality products, offer the most service, achieve
the widest distribution, and sell at the lowest
prices claims too much.
They stress the companys major policies and
values.
They narrow the range of individual discretion so
employees act consistently on important issues.
DEFINING THE CORPORATE
MISSION
They define the major competitive spheres
within which the company will operate.
The table in the next slide summarizes some
key competitive dimensions for mission
statements.
 DEFINING COMPETITVE TERRITORY AND BOUNDARIES IN
MISSION STATEMENTS
Industry. Some companies operate in only one industry; some
only in a set of related industries; some only in industrial goods,
consumer goods; or services; and some in any industry.
Products and applications. Firms define the range of products
and applications they will supply.
Competence. The firm identifies the range of technological and
other core competencies it will master and leverage.
Market segment. The type of market or customers a company
will serve is the market segment.
Vertical. The vertical sphere is the number of channel levels,
from raw material to final product and distribution, in which a
company will participate.
Geographical. The range of regions, countries, or country
groups in which a company will operate defines its geographical
sphere.
DEFINING THE CORPORATE
MISSION
They take a long-term view.
Management should change the mission only
when it ceases to be relevant.

They are as short, memorable, and

meaningful as possible.
Marketing consultant Guy Kawasaki advocates
developing three- to four-word corporate
mantras rather than mission statements, like
Enriching Womens Lives for Mary Kay.
 ESTABLISHING STRATEGIC
BUSINESS UNITS
Companies often define themselves in terms of
products:
They are in the auto business or
The clothing business
Market definitions of a business, however,
describe the business as a customer groups
endure forever.
Viewing businesses in terms of customer needs
can suggest additional growth opportunities.
 PRODUCT-ORIENTED VERSUS MARKET-ORIENTED DEFINITION OF A
BUSINESS

COMPANY PRODUCT DEFINITION MARKET DEFINITION

Union Pacific Railroad We run a railroad. We are a people-and-

(Omaha U.S) goods mover.

Xerox We make copying We help improve office

(U.S) equipment. productivity.

Hess Corporation Well sell gasoline. We supply energy.

(NYC U.S)
Paramount Pictures We make movies. We market
(L.A U.S) entertainment.

Encyclopedia Britannica We sell encyclopedias. We distribute

(U.K and U.S) information.

Carrier We make air We provides climate

(U.S) conditioners and control in the home.
furnaces
 ESTABLISHING STRATEGIC
BUSINESS UNITS
A target market definition tends to focus on selling a
product or service to a current market.
Example: Pepsi could define its target market as everyone
who drinks carbonated soft drinks, and competitors would
therefore be other carbonated soft drink companies.
A strategic market definition, however, also focuses
on the potential market.
Example: If Pepsi considered everyone who might drink
something to quench their thirst, its competition would
include noncarbonated soft drinks, bottled water, fruit
juices, tea, and coffee. To better compete, Pepsi might
decide to sell additional beverages with promising growth
rates.
 ESTABLISHING STRATEGIC
BUSINESS UNITS
A business can define itself in terms of three
dimensions:
Customer groups,
Customer needs, and
Technology
Consider a small company that defines its
business as designing incandescent lightning
systems for television studios. Its customer
group is television studios; the customer
need is lightning; the technology is
incandescent lightning.
 ESTABLISHING STRATEGIC
BUSINESS UNITS
Large companies normally manage quite different
businesses, each requiring its own strategy, At one
time, General Electric classified its businesses into
49 strategic business units (SBUs). An SBU has
three characteristics:
It is a single business, or a collection of related
businesses, that can be planned separately from the
rest of the company.
It has its own set of competitors.
It has a manager responsible for strategic planning
and profit performance, who controls most of the
factors affecting profit.