Marketing Management

MKT 402 Section O Credit Hours 3

Semester : Fall 2018

Lecture # 1

College of Business Management Department of Marketing

INSTITUTE of BUSINESS MANAGEMENT
 Marketing Management
• Intermediate level marketing course.
• Course builds on the learning of Principles of Marketing
• Students are expected to know basic principles of Marketing
• The Concepts form the basis to all marketing elective courses, making it a
vital aspect and foundation of marketing.
• My preference - highly interactive class with the students, who are
encouraged to participate for better understanding and mutual learning.
• References: Course notes, Case studies and relevant academic handouts
• Essential text book: Marketing Management: Kotler Keller 15e, 2015
• Recommended (Reference) book: Positioning: The Battle for Your Mind, by Al
Ries and Jack Trout
• Recommended Readings:
• Harvard Business Review Articles/ Case studies/ Mckinsey Articles/
Professional Marketing Journals
 Students Assessment Scheme
 
Assessment … to access Assessment schedule: Weightage

  Methods   week:  
1 Case/class discussions Intellectual and analytical 4 to 13 10 %
skills

2 1st Mid Term test Knowledge and understanding 6 15 %

3 2nd Mid Term test Professional skills 11 15 %

4 Research term report Professional and practical 7 to 14 20 %

skills

5 Final exam Professional skills 16 40 %

So how was the S U MM E R?
 Intended learning outcomes of
course (ILOs)
• Knowledge and understanding
• Role of marketing in the changing business & market environment
• Building customer centric culture in organizations
• New rules of segmentation and positioning
• New challenges in pricing & distribution
• The importance and application of innovation.
• Intellectual skills
• Opening one’s mind to global ideas and practices in Marketing
• Anticipating, accepting or influencing change in the marketplace
• Challenging the status quo.
 Intended learning outcomes of
course (ILOs)
• Professional and practical skills
• Analyzing business case studies
• Participating productively in group discussions
• General and transferable skills
• Writing summaries of articles & case studies
• Working in teams.
 Learning Outcomes
• We start with laying the foundation by reviewing important
marketing concepts, tools, frameworks, and issues with following
Learning Outcomes:
• Define marketing in the correct context taking into account dramatic
changes in the business environment over the last 20 years
• To compete in an aggressively interactive environment, companies
must shift their focus from driving transactions to maximizing
customer lifetime value.
• Identify the reasons for change and implication on business
organizations
• Operational changes that need to be implemented
• Transforming the marketing department-traditionally focused on
current sales-into a "customer department"
 Value of Marketing
• Finance, Operations and other departments wont matter
without sufficient demand for products so the firm can make a
profit.
• There must be a Top Line for there to be a bottom line.
• Financial success depends on marketing ability.
• Marketing’s value extends to society as a whole.
• New and enhanced products introduced enriching lives,
successful Marketing builds demands for products, which
creates jobs.
• By contributing to the bottom line, marketing allows firms to
fully engage in socially responsible activities.
 Core Marketing Concepts
• Good marketing is no accident, but a result of careful planning and
execution using state of the art tool and techniques.
• Marketing is about identifying and meeting human and social needs.
One of the shortest good definitions of marketing is “meeting needs
profitably.”
• Core of Marketing is focused on customers; identifying their
unfulfilled needs, delivering products/services that satisfy these
needs, creating value and retaining them.
• The American Marketing Association offers the following formal
definition:
• Marketing is the activity, set of institutions, and processes for
creating, communicating, delivering, and exchanging offerings that
have value for customers, clients, partners, and society at large.
• Marketing management takes place when at least one party to a
potential exchange thinks about the means of achieving desired
responses from other parties.
 Core Marketing Concepts
• 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.
• Distinguish between a social and a managerial definition of marketing.
• A social definition shows the role marketing plays in society; which is to
“deliver a higher standard of living.”
• 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.
• “Art of selling products”? ( Selling is only the tip of the marketing iceberg).
• Peter Drucker puts it this way:
• ‘There will always be need for some selling. But the aim of marketing is to
make selling superfluous. The aim of marketing is to know and understand
the customer so well that the product or service fits him and 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 Concepts
• What Is Marketed? - 10 main types
• GOODS: still the mainstays of a modern economy.
• SERVICES: U.S. economy 70–30 services-to-goods mix.
• EVENTS: Time-based events, major trade shows, sporting events etc
• EXPERIENCES: Walt Disney World’s Magic Kingdom
• PERSONS: Celebrities seek help from marketers, Tom Peters, advises
each person to become a “brand.”
• PLACES: Cities, regions, and nations compete to attract tourists,
residents, and investors.
• PROPERTIES: Real estate or financial property (stocks and bonds).
• ORGANIZATIONS: Universities, museums, corporations, and NGOs.
• INFORMATION: Reuters
• IDEAS: Every market offering includes a basic idea. “In the factory we
make cosmetics; in the drugstore we sell hope.” Social marketers
“Friends don’t Let Friends Drive Drunk”
 Core Marketing Concepts
• Marketers are skilled at stimulating demand for their products, but that’s a limited
view.
• Responsible for demand management, influence the level, timing, and composition
of demand to meet the organization’s objectives.
• Negative demand—Consumers dislike the product and may even pay to avoid it.
• Nonexistent demand—Consumers may be unaware of or uninterested in the
product.
• Latent demand—Exists a strong need that cannot be satisfied by an existing
product.
• Declining demand—Consumers begin to buy the product less frequently or not at
all.
• Irregular demand—Purchases vary on a seasonal, monthly, weekly, daily basis.
• Full demand—Consumers are adequately buying all products put into the
marketplace.
• Overfull demand—More consumers would like to buy the product than can be
satisfied.
• Unwholesome demand—Consumers may be attracted to products that have
undesirable social consequences.
 Core Marketing Concepts
• Traditionally, a “market” was a physical place where buyers and
sellers gathered to buy and sell goods.
• Manufacturers go to resource markets (raw material markets, labor
markets, money markets), buy resources and turn them into goods
and services, and sell finished products to intermediaries, who sell
them to consumers.
• Consumers sell their labor and receive money with which they pay
for goods and services.
• The government collects tax revenues to buy goods from resource,
manufacturer, and intermediary markets and uses these goods and
services to provide public services.
• Marketers view sellers as the industry and buyers as the market.
• Need markets (the diet-seeking market), product markets (the shoe
market), demographic markets (the youth market), and geographic
markets (the Chinese market); or extend the concept to voter
markets, labor markets, and donor markets etc.
Structure of Flows in a Modern
Exchange Economy
 Core Marketing Concepts
• Needs, Wants, and Demands
• Needs are the basic human requirements. Humans also have strong
needs for recreation, education, and entertainment.
• These needs become wants when they are directed to specific
objects that might satisfy the need.
• Wants are shaped by our society.
• Demands are wants for specific products backed by an ability to pay.
Many people want a Mercedes; only a few are able to buy one.
Companies must measure how many are willing and able to buy it.
• Marketers do not create needs: along with societal factors, influence
wants. Mercedes would satisfy a person’s need for social status. They
do not, however, create the need for social status.
 Core Marketing Concepts
• Some customers have needs of which they are not fully conscious.
• Stated needs (The customer wants an inexpensive car.)
• Real needs (The customer wants a car whose operating cost, not
initial price, is low.)
• Unstated needs (The customer expects good service from the dealer.)
• Delight needs (The customer would like the dealer to include an
onboard GPS navigation system.)
• Secret needs (The customer wants friends to see him a savvy
consumer.)
• Responding only to the stated need may shortchange the customer.
To gain an edge, companies must help customers learn what they
want.
 Core Marketing Concepts
• Target Markets, Positioning, and Segmentation
• Three elements of a Strategic Framework, foundation of turning
consumers into customers
• The commonality of need or interest constitutes a market segment
• Marketers divide the market into segments, and profile distinct groups of
buyers who require varying product and service.
• Targeting means selecting the segments, which present the greatest
opportunities— its target markets, and pursuing them
• Positioning – distinct image, and identity for the brand. Process of
differentiating from the competitors, communicating distinct benefits.
• Firm develops a market offering delivering some central benefit(s). Volvo
• The intangible value proposition is made physical by an offering, which
can be a combination of products, services, information, and experiences.
• A brand is an offering from a known source. McDonald’s carries many
associations in people’s minds that make up its image.
 Core Marketing Concepts
• Marketing Channels
• Marketer uses three kinds of marketing channels; Communication, distribution, and
service channels
• Marketers clearly face a design challenge in choosing the best mix of channels for their
offerings.
• Supply Chain
• Channel stretching from raw materials to components to finished products carried to
final buyers.
• Competition
• Includes all the actual and potential rival offerings and substitutes.
• Marketing Environment
• The marketing environment consists of the task environment and the broad
environment. These are the company, suppliers, distributors, dealers, and target
customers.
• The broad environment consists of six components: demographic environment,
economic environment, social-cultural environment, natural environment,
technological environment, and political- legal environment.
• Marketers must pay close attention to the trends and developments in these and adjust
their marketing strategies as needed.
 Core Marketing Concepts
• Core of Marketing is focused on customers; identifying their
unfulfilled needs, delivering products/services that satisfy these
needs, creating value and retaining them.
• Production Concept
• Product Concept; marketing myopia; focus on the product rather
than the needs it presumes to satisfy.
• Selling Concept
• Marketing Concept; consumer research, market segmentation, a
combination of the product, price, place and promotion strategies,
provide value that results into long term customer satisfaction and
retention.
• Marketing Management becomes an art and science of choosing
target markets and getting, keeping and growing customers through
creating, delivering and communicating superior customer value in
the 21t century marketing environment.
 The new Marketing Realities
Three transformative forces
Technology: Number of mobile phones (10 times more
phones are produced each day than babies born, trillion $
industry), social media, e-commerce, mobile internet,
CMOs time on IT, sharing information is power
2. Globalization: It is a smaller world, demographic trends
for Pakistan, multicultural societies, lessons learnt from
one region to the other on the societal marketing concept,
as well as segmentation, targeting, and positioning.
3. Social Responsibility:
 Socially Responsible Marketing
• In-depth understanding of consumer behavior can enable unethical
marketers to exploit human vulnerabilities.
• All Companies prosper when society prospers
• Fulfil the needs of the target segment that improves, society’s well being,
simultaneously meeting business objectives.
• Integrate social responsibility to the marketing strategies.
• Incorporate social goals in the mission statements.
• Socially responsible activities improve image among stakeholders, and it is
a good business.
• PPL has received Pakistan Corporate Philanthropy Award for 12
consecutive years from 2004 to 2015. ‘Commitment to Communities’
 Dramatically Changed Marketplace
• New Consumer Capabilities:
• Internet as information and purchasing aid
• Consumers can search, communicate and purchase on the move
• Share opinions on social media
• Consumers can actively interact with Companies
• New Company Capabilities
• Companies use web as information and sales channel
• Rich information on customers, and competitors
• Capability to reach customers quickly and efficiently
• Improve cost efficiency
• Changing Channels
• Retail transformation
• Disintermediation
 Shift focus - transactions to maximizing
Customer Lifetime Value (CLV)
• To compete in an aggressively interactive environment, companies
must shift their focus from driving transactions to maximizing CLV.
• Brands subservient to long term customer relationship – changing
structures across the organization and reinventing the Marketing
department altogether.
• Communication is two way and individualized Customer’s
perception of performance in relation to their expectations.
• B 2 B Companies use key account Managers to focus on evolving
needs than selling products – IBM, P&G
•
 Customer focused Re-Organization
• Transform the Marketing Department – traditionally focused on
current sales into a Customer Department by replacing the CMO
with a Chief Customer Officer
• Cultivate Customers rather than pushing products and adopt
new performance metrics
• Bring under the Marketing umbrella all customer focused
departments including R&D, and Customer Service.
 Role of Chief Customer Officer
• Role of Customer Officer is the ultimate expression of Marketing
– find out what customers want and fulfil their needs.
• T- shaped people broad experience with depth in certain
disciplines
• Framework common in B2B Markets, focused on maximizing
customer value.
 Customer Retention
• Loyal customers:
• Buy more, ready-market for new models
• Important asset, when new products are developed & tested.
• Less price sensitive, make it harder for new entrants.
• Spread positive word of mouth, and refer other customers
• Marketing efforts at new customers are expensive
• Low customer turnover results in higher profits.
 Customer Retention
• Emotional Bonds: High level of personal commitment and
attachment to the Company

• Transaction Bonds: Mechanics/structures that facilitate

exchanges between consumers and sellers.