marketing management | unit 1 mba (integrated) | t-104

Introduction to MARKETİNG

Rahul Pratap Singh KauravAsst. Professor, Prestige Institute of Management

INTRODUCTİON TO MARKETİNG

Marketing; “Satisfying customer needs” “Meeting needs profitably” “Generating customer value at a profit”

“Managing profitable customer relationships by delivering superior value to customers”

WHAT İS MARKETİNG? No single correct definition or approach Common subject matters:

The ability to satisfy customers, The identification of favorable marketing

opportunities, The need to create an edge over competitors, The capacity to make profits to enable a viable

future for the organization, The use of resources to maximize a business’

market position, The aim to increase market share mainly in target

markets

MARKETİNG PROCESS

Build profitable

relationships and create customer

delight

Capture value from customers to create profits and customer quality

Create value for customers and build customer relationships

Capture value from customers in return

Design a customer-

driven marketing strategy

Construct a marketing

program that delivers superior

value

Understand the

marketplace and customer needs&wants

CORE CONCEPTS OF MARKETING

Needs, wants, and demands

Productsand services

Value and satisfaction

Exchange, transactions,

and relationships

Markets



Marketing offers: including products, services and experiences

Value and satisfaction Exchange, transactions

and relationships Markets

Need Basic human requirements State of felt deprivation

Example: Need food Wants

Needs directed to specific objects

The form of needs as shaped by culture and the individual Example: Want a Big Mac

Demands Wants which are backed

by buying power






Marketing offering Combination of

products, services, information or experiences that satisfy a need or want

Offer may include services, activities, people, places, information or ideas

ProductsAnything that can be Offered to a Market to Satisfy a Need or Want

Experiences Persons Places

Organizations IdeasInformation


ServicesActivities or Benefits Offered for Sale That Are EssentiallyIntangible and Don’t Result in the Ownership of Anything

MARKET OFFERINGS - EXAMPLES

Marketing places : Creating positive attitudes or maintaining attitudes & behavior toward particular places

MARKET OFFERİNGS- EXAMPLES

“Friends Don’t Let Friends Drive Drunk”

Marketing ideas(social marketing)

This is the watch Stephen Hollingshead, Jr. was wearing when he encountered a drunk driver. Time of death 6:55 p.m.






Value Customers form

expectations regarding value

Marketers must deliver value to consumers

Satisfaction A satisfied customer will

buy again and tell others about their good experience


Total Quality Management Involves Improving the Quality of Products, Services, and Marketing Processes

Product’s Perceived Performance in Delivering Value Relative to Buyer’s Expectations is

“Customer Satisfaction”

Value Gained From Owning a Product and Costs of Obtaining the Product is

“Customer Value”

CORE CONCEPTS OF MARKETING Needs, wants, and

demands Marketing offers:

including products, services and experiences

Value and satisfaction Exchange,

transactions and relationships

Markets

Exchange The act of obtaining a desired object from someone by offering something in return

Transaction Trade of values between two or more parties

One exchange is not the goal, relationships with several exchanges are the goal

Relationships are built through delivering value and satisfaction Marketing network ğ consists of the company and all its supporting stakeholders

CORE CONCEPTS OF MARKETING Needs, wants, and

demands Marketing offers:

including products, services and experiences



Market Set of actual and

potential buyers of a product

Marketers seek buyers that are profitable

SIMPLE MARKETING SYSTEM

Industry(a collection

of sellers)

Market(a collection

of Buyers)

Products/services

Money

Communication

Information

MARKETING DEFİNED AS...

Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others.

Simply put: Marketing ğ the delivery of customer

satisfaction at a profit.

MORE DEFİNİTİONS OF MARKETİNG• A social and managerial process by which individuals and groups obtain what they need and

want through creating, offering and exchanging products and services of value with others.• The management process responsible for identifying, anticipating and satisfying customer

requirements profitably. • Marketing consists of individual and organizational activities that facilitate and enhance satisfying

exchange relationships in a dynamic environment through the creation, servicing, distribution, promotion and pricing of goods, services and ideas

MORE DEFİNİTİONS OF MARKETİNG (CONT.)

From the societal perspective; some marketers describe marketing as the creation and delivery of a standart of living.

From the managerial perspective; marketing (management) is the process of planning and executing the conception, pricing, promotion and distribution of goods and services to create exchanges that satisfy individual and organizational goals.

MARKETİNG MANAGEMENT Marketing management ğ the art and science of

choosing target markets and building profitable relationships with them.This definition must include answers to 2

questions:What customers will we serve?How can we serve these customers best?

Getting, keeping, and growing customers through creating, delivering, and communicating superior customer value

Marketing management involves ğ managing demand ğ involves managing customer relationships

MARKETİNG MANAGEMENT

Marketing management can be defined in broader terms as “demand management”; Marketers aim to influence the level, timing and

composition of demand to meet organizational goals.

Marketing management is concernednot only with finding and increasing demand, but also with changing or even reducing it :

demarketing! Demarketing’s aim is to reduce the number of

customers or to shift their demand temporarily or permanently (e.g. move traffic away from a popular tourist attraction during

peak demand times)

EVOLUTİON OF MARKETİNG THOUGHT

How marketing has become “marketing” as we understand it and apply its practices today?

EVOLUTİON OF MARKETİNG THOUGHT

Production Era (1850s-1920s) Industrial revolution; mass production Few products and little competition

Sales Era (1920s-1950s) The focus was on personal selling and advertising Sales seen as the major means for increasing profits

Mktg Era (1950s-present) Customer orientation replaced the “hard sell” of the sales-led

era Determination of the needs and wants of customers before

introducing products or services

EVOLUTİON OF MARKETİNG THOUGHT Relationship Marketing Era: 1990s-

Marketing era has recently shifted from being “transaction-based” ğ to focusing on “relationships”

The argument ğ traditional marketing practices focused on attracting new customers rather than retaining existing ones.

It is equally important to hang on to existing customers so that they become repeat buyers and long term loyal customers

“customer relationship management”!

Production Concept

Product Concept

Selling Concept

Marketing Concept

Consumers prefer products that are widely available and inexpensive

Consumers favor products that offer the most quality, performance,

or innovative features

Consumers will buy products only ifthe company aggressively

promotes/sells these products

Focuses on needs/ wants of target markets & delivering value

better than competitors

COMPANY ORIENTATIONS TOWARDS THE MARKETPLACE

PRODUCTİON CONCEPT

Consumers will favor those products that are widely available and low in cost.

Managers concentrate on achieving high production efficiency and wide distribution.

The assumption is valid at least in 2 situations : The demand for a product exceeds supply

(suppliers will concentrate on finding ways to increase production)

The product’s cost is high and has to be decreased to expand the market.

PRODUCT CONCEPT

Consumers will favor those products that offer the most quality, performance or innovative features.

Managers in product-oriented organizations concentrate on making superior products and improving them over time.

The assumption ğ the customers will admire well-made products and can evaluate product quality and performance

This concept may lead to marketing myopia

SELLİNG CONCEPT

Agressive selling and promotion Assumptions are;

Consumers must be convinced of buying company products

Company is powerful in generating effective selling and promotion to stimulate more buying

This concept is mostly used by firms which have overcapacity.

The aim is “to sell what they make” rather than “make what the market wants.”

Short-term profits are more important (customer dissatisfaction may occur)

MARKETİNG CONCEPT Key to achieving organizational goals consists

of being more effective than competitors in creating, delivering and communicating customer value to target markets.

4 pillars of modern marketing :1. Target market2. Customer needs3. Integrated marketing4. Profitability through customer

satisfaction

Market Integratedmarketing

Profits throughcustomer

satisfactionCustomer

needs

(b) The marketing concept

Factory Existingproducts

Selling andpromotion

Profits throughsales volume

Startingpoint Focus Means Ends

(a) The selling concept

MARKETING AND SALES CONCEPTS CONTRASTED

DIFFERENCES BETWEEN SELLING AND MARKETING

MARKETİNG CONCEPT (CONT.)

1) Target market ğ homogenous group of customers to whom the company wishes to appeal

2) Customer needs Consumers may not be fully conscious of their needs It may not be easy to articulate these needs They may use words that require some interpretation Customer-oriented thinking ğ to define customer

needs from the customer’s point of view Sales revenue ğ New customers + Repeat customers “Customer Retention” vs. “Customer Attraction” Customer satisfaction is a function of the product

perceived performance and buyer’s expectations

MARKETİNG CONCEPT (CONT.)

3) Integrated Marketing1. Various marketing functions must work together

for customer satisfaction (coordination of 4Ps; marketing mix elements)

Marketing Mix ğ controllable variables the company puts together to satisfy its target market(s).

Product: Product variety, quality, design, features, brand name, packaging, sizes, services, warranties, returns

Price: List price, discounts, allowances, payment period, credit terms

Promotion: Sales promotion, advertising, sales force, public relations, direct marketing

Place: Channels, coverage, assortments, locations, inventory, transport

MARKETİNG CONCEPT - THE 4 P’S

MARKETİNG CONCEPT - THE 4 P’S ĞĞ THE 4 CS

MarketingMix

Product

PricePromotion

Place

CustomerSolution

CustomerCost Communication

Convenience

MARKETİNG CONCEPT (CONT.)Integrated Marketing (cont.)

2. Marketing must be well coordinated with other departments in the company;all departments have to work together to satisfy customers’ needs and wants

4) Profitability through customer satisfaction

To achieve profits as a result of creating superior customer value

SELLING – MARKETİNG...

“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.” Peter Drucker

Customers

Front-line people

Middle Management

TopManagement

MODERN MARKETİNG CONCEPT TRADITIONAL ORGANIZATION CHART

MODERN MARKETİNG CONCEPT CUSTOMER-ORIENTED ORGANIZATION CHART

Customers

Front-line people

Middle management

Topmanage-

ment

Customers Custom

ers

RELATİONSHİP MARKETİNG CONCEPT Customer Relationship Management ğ the

overall process of building and maintaining profitable customer relationships by delivering superior customer value and satisfaction. It deals with all aspects of acquiring, keeping

and growing customersRelationship building blocks ğ “customer value”

and “customer satisfaction”“Customer retention” and “customer loyalty”The intention ğ to gain a greater proportion of

an existing customer’s purchases over a long period (increase “consumer lifetime value”!)

RELATİONSHİP MARKETİNG CONCEPT“Our slogan ‘5+Million More Smiling Customers’ is not about reaching sales targets but about whether we are able to provide greater satisfaction to a greater number of customers...

The goal is to improve customer satisfaction which translates to an increased number of ‘smiling customers.”

Tokuichi UranishiExecutive Vice President, Toyota Motor Corporation

CONNECTIONS WITH CUSTOMERS – NOT ALL CUSTOMERS ARE EQUAL

• Most marketers are targeting fewer, potentially more profitable customers.

• Asking:▫ What value does the customer bring to the

organization?▫ Are they worth pursuing? – customer profitability

analysis• Focus has shifted to:

▫ keeping current customers, and ▫ building lasting relationships based on superior

satisfaction and value. It costs 5 to 10 times as much to attract a new customer

as it does to keep a current customer satisfied.

CUSTOMER RELATİONSHİP MANAGEMENT CAPTURING VALUE FROM CUSTOMERS

Customer Loyalty and Retention

Share of Customer Customer Equity

Customer delight leads to emotional relationships and loyalty

Customer Lifetime Value (CLV) shows true worth of a customer

Key ConceptsKey Concepts




Share of customer’s purchase in a product category.

Achieved through offering greater variety, cross-sell and up-sell strategies.





The combined customer lifetime values of all current and potential customers.

Measures a firm’s performance, but in a manner that looks to the future.

Choosing the “best” customers is key


SOCİETAL MARKETİNG CONCEPT

Company’s negative effects on society Conflict between consumer wants and long-term

social welfare Marketing managers should be concerned with

social responsibility The societal marketing concept

Company’s task is to determine needs and wants of target markets & to satisfy them more effectively and efficiently than competitors --in a way that preserves or enhances the consumer’s and society’s well-being.

SOCIETAL MARKETING CONCEPT

Societal Marketing

Concept

Company(Profits)

Consumers(Want Satisfaction)

Society(Human Welfare)

MARKET SEGMENTATION, TARGETING AND POSITIONING

MARKETSMARKETS

1(Exercisers)

3(Transportation riders)

2(School-goers)

4(Adventurers)

Market segments for Bicycles

MARKETSMARKETS

MARKET SEGMENTSGroups of customers with different wants, buying preferences or product-use behavior

TARGET MARKETA market segment for whichthe seller designs a marketing mix

MARKET SEGMENTATIONMARKET SEGMENTATION

Process of dividing the total marketProcess of dividing the total marketfor a good or service into several smaller,for a good or service into several smaller, internally homogeneous groupsinternally homogeneous groups

Members of each group areMembers of each group are similar with respect to the factorssimilar with respect to the factors that influence demandthat influence demand

PROCESS OF MARKET PROCESS OF MARKET SEGMENTATIONSEGMENTATION

Determine size and satisfactionDetermine size and satisfaction

Identify wants within a marketIdentify wants within a market

Identify characteristics that Identify characteristics that distinguish the segmentsdistinguish the segments

MARKET SEGMENTATION MARKET SEGMENTATION CONDITIONSCONDITIONS

MICROMARKETINGMICROMARKETINGTreat each single customerTreat each single customer as a separate segmentas a separate segment

Large enoughLarge enoughto be to be ProfitableProfitable

Segment isSegment isAccessibleAccessible

MeasurableMeasurableand and Obtainable DataObtainable Data

MARKET SEGMENTATIONMARKET SEGMENTATION

Customer’s reason for buyingCustomer’s reason for buying

CONSUMERCONSUMER Purchase for personal usePurchase for personal use

BUSINESSBUSINESS Purchase to use in organizations, Purchase to use in organizations, to resell, or to make other productsto resell, or to make other products

SEGMENTATION BASESSEGMENTATION BASES FOR CONSUMER MARKETS FOR CONSUMER MARKETS

1.Geographic 1.Geographic

RegionRegion

Urban- RuralUrban- Rural

ClimateClimate

Metro, A, B, CMetro, A, B, C

Etc.Etc.

Possible Market SegmentsPossible Market Segments

-North, South, North, South, East WestEast West

-Coastal, Non-coastalCoastal, Non-coastal-Metro, Large towns, Metro, Large towns,

Small townsSmall towns-Rural, UrbanRural, Urban-Villages > 1000, Villages > 1000, < 1000 population etc< 1000 population etc


2.Demographic 2.Demographic

AgeAge

GenderGender

Family life-cycle Family life-cycle

IncomeIncome

Education,Education, etc.tc.


-< 6M, 4-6 Yrs, 20-40, < 6M, 4-6 Yrs, 20-40, 50+ etc50+ etc

-Male, FemaleMale, Female-Young couples w/o Young couples w/o children, Bachelor etcchildren, Bachelor etc-10K-20K/M, >50K/M 10K-20K/M, >50K/M - Graduate, PG, Graduate, PG, Engineers etcEngineers etc


3.Psychographic 3.Psychographic

Personality

Consumer values

Life-style (Activities,Interests & Opinion)


-Introvert/Extroverts,Introvert/Extroverts,Achievers, etc Achievers, etc -Spiritual, Yoga, MusicSpiritual, Yoga, MusicPolitics, Business etcPolitics, Business etc-Strength of ValuesStrength of Valuessuch as fun, love &such as fun, love &warmth, relationshipwarmth, relationshipEtc.Etc.


4.Behavioral 4.Behavioral

Benefits desired

Usage rate


- Virtually for all Virtually for all products products - Heavy, Medium, Heavy, Medium, Low user, Non-userLow user, Non-user

SEGMENTATION BASESSEGMENTATION BASES FOR BUSINESS MARKETS FOR BUSINESS MARKETS

1.Customer1.CustomerLocationLocation

RegionRegion

CountryCountry

Town etcTown etc


-North, South, North, South, East WestEast West

-Coastal, Non-coastalCoastal, Non-coastal-Metro, Large towns, Metro, Large towns,

Small townsSmall towns-Rural, UrbanRural, Urban-Europe, AseaEurope, Asea


2.Customer2.CustomerTypeType

IndustryIndustry

SizeSize

Organizational structureOrganizational structure


-Steel, Cement, TextileSteel, Cement, Textile-Large, Small, MediumLarge, Small, Medium-Centralized, Decentr-Centralized, Decentr-allized, allized, -Price, Price & quality,Price, Price & quality,process for selectionprocess for selectionEtc.Etc.

Purchase CriteriaPurchase Criteria


3.Transaction3.TransactionConditionCondition

Buying SituationBuying Situation

Usage RateUsage Rate

Purchase ProcessPurchase Process

Order SizeOrder Size

Service ReqrmtService Reqrmt


-Straight/Modified Straight/Modified re-buy, New Buyre-buy, New Buy-Non/Light/Heavy userNon/Light/Heavy user- Competitive Bidding,Competitive Bidding,Leasing, Service etcLeasing, Service etc-Large, small etcLarge, small etc-More frequent, More frequent, occasional, etcoccasional, etc

TARGET-MARKET STRATEGYTARGET-MARKET STRATEGY

Single MarketingStrategy“shotgun”

Market-aggregationStrategy“mass-market”“undifferentiated-market”

and

Product differentiationStrategy


Single-SegmentStrategy“concentration ”

NICHEMARKETERS

One MarketingMix


Multiple MarketingMixes

Multiple-SegmentStrategy

SELECTING A TARGET MARKET SELECTING A TARGET MARKET GUIDELINESGUIDELINES

Compatible with company’s goals

Match market opportunity with resources

Profit that justifies investment

Competitors are few and/or weak

POSITIONINGPOSITIONING

Firm creating and maintainingin the minds of a target market a particularimage relative to competing products

Coordinate the marketing mixCoordinate the marketing mix to convey positionto convey position

Design the feature thatDesign the feature that conveys positionconveys position

Select position conceptSelect position concept

THREE STEPSTHREE STEPS

MARKET POSITIONING Positioning is defined as the process of designing

the company’s products and image to occupy a unique place in the target market’s mind.

Many marketers favor promoting only one major benefit and Rosser Reeves called it as “a unique selling proposition”. Some unique selling propositions (USPs) companies use are best quality, best service, lowest price, best value, safest, more advanced technology, etc.

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THE FOUR MAJOR POSITIONING ERRORS

• Under positioning: Some companies find that buyers have only an unclear idea of the brand.

• Over positioning: Buyers have very narrow image of the brand.

• Confused positioning: Buyers have confused image of the brand because the company has made too many claims or changed the brand positioning too frequently.

• Doubtful positioning: Buyers do not easily believe the claims made by brands about the product’s features, price or manufacturer.

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BASES OF POSITIONING THE PRODUCT

1. Attribute positioning: The company positions itself on the basis of attribute like size or number of years in existence. Sunfeast positions its snacky brand as bigger, lighter and cheaper.

2. Benefit positioning: The company positions its product as leader in providing a certain benefit. For example Santro positioned itself as India’s simplest car to drive.

3. Use or application positioning: The company positions its products as best for certain use or application. For example, Kenstar positioned its products as unexpectedly cold.

4. User positioning: The company positions its product as best for some user group. For example, Parle-G positions the boy in the advertisement as rock star targeting the kids and boys.

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BASES OF POSITIONING THE PRODUCT5. Competitor positioning: The company claims its

products as better than a named competitor.6. Product category positioning: The company

positions its product as leader in certain product category. For example, Bajaj CT 100 was positioned as leader in the entry segment bikes.

7. Quality or price positioning: The product is positioned as offering the best value. For example, the vegetable oil brand Dhara positions itself as ‘anokhi shuddata, anokha asar’. This means the company offers unique purity and unique effect.

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PERCEPTUAL MAP FOR DIFFERENT BRANDS OF PERCEPTUAL MAP FOR DIFFERENT BRANDS OF CARSCARS

FORECASTING MARKET DEMANDFORECASTING MARKET DEMAND

brand x brand your company brand z

MARKET SHAREMARKET SHAREProportion of total sales of a Proportion of total sales of a Product during a stated periodProduct during a stated periodin a specific market in a specific market that is captured by a single firmthat is captured by a single firm

MARKET FACTORMARKET FACTOR1) exists in the market1) exists in the market2) is measurable2) is measurable3) is related to the demand 3) is related to the demand for a product in a known wayfor a product in a known way


Total sales of a Product during a Period in a marketunder ideal conditions

MARKET POTENTIAL


Portion of market potential that a specific companycould expect under ideal conditions

SALES POTENTIAL


Estimate of sales For one companyduring a periodin a specific market assuming a defined marketing plan

SALES FORECAST

METHODS OF SALES FORECASTINGMETHODS OF SALES FORECASTING

Market-Factor Analysis

Survey of Buyer Intentions

Sales-Force Composite

Executive Judgment

Test Marketing

Past SalesandTrend Analysis

CHALLENGES IN NETWORKED WORLD OF MARKETING

• Digital ageDigital age• Globalization• Ethics and social

responsibility• Not-for-profit

marketing• Marketing

relationships

Growth of the Internet Advances in

telecommunications, information, transportation Customer research and

tracking Product development Distribution New advertising tools 24/7 marketing through

the Internet

Challenges

• Digital age• GlobalizationGlobalization• Ethics and social


marketing• Marketing

relationships

Geographical and cultural distances have shrunk Greater market

coverage More options for

purchasing and manufacturing

Increased competition from foreign competitors

Challenges

Challenges in Networked World of Marketing


Digital age Globalization Ethics and social

responsibility Not-for-profit

marketing Marketing

relationships

Marketers need to take great responsibility for the impact of their actions

ChallengesChallenges


• Digital age• Globalization• Ethics and social

responsibility• Not-for-profit Not-for-profit

marketingmarketing• Marketing

relationships

Many organizations are realizing the importance of strategic marketing Performing arts Government agencies Colleges, universities Hospitals



• Digital age• Globalization• Ethics and social


marketing• Marketing Marketing

relationshipsrelationships

Profits through managing long-term customer equity Improve customer

knowledge Target profitable

customers Keep profitable

customers
