MSL 116 - MARKETING MANAGEMENT

Unit I Introduction to Marketing Management

Definitions of marketing: “Marketing is the process of discovering
and translating consumer needs and wants into products and
services, specifications, creating demand for these products
and services and then in turn expanding this demand”.________
H.L Hansen.
“Marketing is the business process by which pr oducts are
matched with market and through which transfers of ownership
are effected”. __ E.W.Cundiff
"Marketing consists of the performance of business activities
that direct the flow of goods and services from producers or
suppliers to consumers or end- users”. _____ American Marketing
Association.
“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”. _____ Philip Kotler.
Definition of Marketing Management:
“Marketing Management as the art and science of choosing
target markets and getting, keeping, and growing customers
through creating, delivering, and communicating superior
customer value.”
Nature of Marketing:
Marketing is both consumer- oriented and competitors- oriented.
It starts with consumers and ends at consumers by satisfying
their needs. Marketing is the most important function of
management.
The long-term objective of marketing is profit maximisation
through customer satisfaction.
Marketing is an integrated process which is based on strategies
and models.
Marketing must deliver goods and services in exchange of
money.

The Evolution of Marketing:

1. Production Era:
2. Sales Era:
3. Marketing Era:
Marketing satisfies our needs by providing form
utility, person utility, exchange utility, place
utility and time utility.

Form utility: Raw materials→ converting into →

Finished goods

Person utility: Marketer→ establishing contact →

Customers

Exchange utility: Seller → transfers goods to→

Buyers

Place utility: Channels of → physical distribution

→
Distribution and logistics

Customers
Time utility: Warehousing → making available
goods when needed →
Customers.

Creating time utility: Marketing can be summed up

as consisting of sales in a planned way; Creation
of customers; Creation of demand and satisfying
it.

Scope of Marketing:
→ Functions of 1. Buying
Function
Exchange 2. Assembling
Function
3. Selling
Function

Marketing → Functions of 1. Transportation

Functions Physical 2. Inventory
Management
Distribution 3. Warehousing
4. Material
Handling

→ Functions of 1. Financing
Facilities 2. Risk Taking
3.
Standardisation
4. After-sales
Service

Exchange and Transactions: For exchange potential

to exist, five conditions must be satisfied:
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 accept or reject the
exchange offer;
Each party believes it is appropriate or desirable
to deal with the other party.
Marketing management and its evolution:

Barter system: The surplus of products had been

exchanged in the immediate Neighbourhoods in
exchange for the surplus of other goods.

Production concept: Managers of production

oriented businesses concentrate on achieving
high production efficiency, low costs, and mass
distribution.
 Product concept: consumers will favour those
products that offer the most quality, performance,
or innovative features. Managers focus on making
superior Products and improving them over time.

Selling concept: Most firms practice the selling

concept when they have overcapacity. Their aim
is to sell what they carries high risks.

Marketing concept: The marketing concept holds

that the key to achieving organizational goals
consists of the company being more effective
than competitors in creating, delivering, and
communicating superior customer value to its
chosen target markets.

Marketing Mix:
Product Price Place
Promotion Product variety List
price Channels Sales promotion
Quality Discounts Coverage
Advertising

Design Allowances Assortments

Sales force

Features Payment period Locations Public

relation

Brand name Credit terms Inventory Direct

marketing

Packaging Transport
Sizes
Services
Warranties
Returns

Key customer markets:

Consumer markets: companies selling mass consumer goods
and services such as soft drinks, cosmetics, air travel,
and athletic shoes and equipment spend a great deal of
time trying to establish a superior brand image.

Business markets: companies selling business goods and

services. Often face well-trained and well-informed
professional buyers who are skilled in evaluating
competitive offerings.

Global markets: companies selling goods and services in

the global market place face additional decisions and
challenges. They must decide which countries to enter;
how to enter each country; how to adapt their product and
service features to each country; how to price their
products in different countries; and how to adapt their
communications to fit different cultures.

Non-profit and Government markets: companies selling their

goods to non-profit organizations such as churches,
charitable organizations; or government agencies need to
 price carefully because these organizations have limited
purchasing power; lower prices affect the features and
quality that the seller can build into the offering.

Core concepts of Marketing:

Needs, Wants, and Demands:

Stated needs (the customer wants an inexpensive car).
Real needs (the customer wants a car whose operating cost, not
its 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 navigation system).
Secret needs (the customer wants to be seen by friends as a
savvy consumer).
Needs are the basic human requirements. People also have
strong needs for recreation, education, and entertainment.
These needs become wants when they are directed to specific
objectives that might satisfy the need.
Demands are wants for specific products backed by an ability to
pay. Companies must measure not only how many people want
their product, but also how many would actually be willing and
able to buy it.
Eight demands states are possible:
1 Negative demand : consumers dislike the product and may
even pay a price to avoid it.
2 Nonexistent demand : consumers may be unaware of or
uninterested in the product.
3 Latent demand : consumers may share a strong need that
cannot be satisfied by an existing product.
4 Declining demand : consumers begin to buy the product less
frequently or not at all.
5 Irregular demand : consumers purchases vary on a seasonal,
monthly, weekly, daily, or even hourly basis.
6 Full demand : consumers are adequately buying all products
put into the marketplace.
7 Overfull demand : More consumers would like to buy the
product than can be satisfied.
8 Unwholesome demand : consumers may be attracted to
products that have undesirable social consequences.
Target markets, Positioning, and Segmentation:
The market decides which segments present the greatest
opportunity-
which is its target markets.
For each chosen target market, the firm develops a market
offering.
The offering is positioned in the minds of the target buyers as
delivering some central benefits.

Offerings and Brands:

The tangible 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. A brand name
carries
many associations in the minds of people. These associations
make
up the brand image. All companies strive to build brand
strength-i.e. a strong, favourable, and unique brand image.

Value and satisfaction:

The buyer chooses between different offerings on the basis of
which is perceived to deliver the most value. Value reflects the
perceived tangible and intangible benefits and costs to
customers. Value can be seen as primarily a combination of
quality, service, and price called the ‘customer value triad’.
Satisfaction reflects a person’s comparative judgements
resulting
from a product’s perceived performance in relation to his
expectations.

Marketing Channels:
To reach a target market, the marketer uses three kinds of marketing
channels.
Communication channels deliver and receive messages from target
buyers.
Distribution channels to display, sell, or deliver the physical product
or services to the buyer or user.
Service channels to carry out transactions with potential buyers .
Supply chain:
 The supply chain is a longer channel stretching from raw materials to
components to final products that ar e carried to final buyers. Each
company captures only a certai n percentage of the total value
generated by the supply chain’ s value delivery system. When a
company acquires competitors or expands upstream or downstream,
its aim is to capture a higher percentage of supply chain value.

Competition:
Competition includes all the actual and potential rival offerings and
substitutes a buyer might consider.

Marketing Environment:
The marketing environment consists of the task environment and the
broad environment. The task environment includes the actors engaged
in producing, distributing, and promoting the offering. These are the
company, suppliers, distributors, dealers, and the target customers.
The broad environment consists of six components: demographic
environment, economic environment, physical environment,
technological environment, political-lega l environment, and social
cultural environment. Marketers must pay close attention to the
trends and developments in these environments and make timely
adjustments and make timely adjustments to their marketing
strategies.

Differences between Industrial and Consumer Marketing:

Areas Industrial Markets Consumer Markets
1. Market - Geographically concentrated – Geographically
characteristics disbursed
- Relatively fewer buyers - Mass markets

2. Product characteristics - Technical complexity - Standardised

- Customise.

3. Service - Service, timely delivery and - Service, delivery,

availability very important - somewhat important

4. Buyer behaviour - Involvement of various

functional areas -Involvement
in both buyer and supplier of family members
firms.
 -Purchase decisions are
mainly made on - Purchase decisions
rational /performance basis . are mostly made on

physiological/social/
Psychological
needs

-Technical expertise -Less technical

expertise
Stable interpersonal relationship -Non-personal
relationship
Between buyers and sellers

5. Channel –More direct - Indirect

characteristics - Fewer intermediaries/ - Multiple layers of
Middlemen intermediaries
6.Promotional - Emphasis on personal - Emphasis on
Characteristics Selling advertising

7.Price
characteristics - Competitive bidding and - List prices or maximum
. Negotiated prices retail price (MRP)
-List prices for standard products

Unit II Marketing Planning:

Corporate and Division Strategic Planning:
 All corporate headquarters undertake four planning activities:
Defining the corporate mission
Establishing strategic business units
Assigning resources to each SBU
Assessing growth opportunities

Defining the corporate Mission:

To define its mission, a company should address Peter Drucker’s
classic question: What is our business? Who is the customer? What
is of value to the customer? What will our business be? What should
our business be? These simple sounding questions are among the
most difficult a company will ever have to answer.
Successful companies continuously raise these questions and
answer them thoughtfully and thoroughly. A company must redefine
its mission if that mission has lost credibility or no longer defines an
optimal course for growth.
Good mission statements have five major characteristics.
First, 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. Second, mission statements stress the company’s major
policies and values. They narrow the range of individual discretion
so that employees act consistently on important issues. Third, they
define the major competitive spheres within which the company will
operate.
Industry: some companies will 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. For example,
Dupont prefers to operate in the industrial market, whereas Dow is
willing to operate in the industrial and consumer markets.
Products and application: 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. Some
companies operate in a specific city or state. Others are
multinational such as Unilever and Caterpillar, which operate in
almost every country in the world.
Definition of Business:
Companies often define their business in terms of products: They are
in the “auto business” or the “clothing business.” But Levitt argues
that market definitions of a business are superior to product
definitions. A business must be viewed as a customer-satisfying
process, not a goods-producing process. Products are transient; basic
needs and customer groups endure forever. Transportation is a need:
the horse and carriage, the automobile, the railroad, the airline, and
the truck are products that meet that need.
Levitt encouraged companies to redefine their businesses in terms of
needs, not products. A target market definition tends to focus on
selling a product or service. Pepsi could define its target market as
everyone who drinks a cola beverage and competitors would therefore
be other cola companies. A strategic market definition could be
everyone who might drink something to quench (satisfy) his or her
thirst.
A business can be defined in terms of three dimensions: customer
groups, customer needs, and technology. Large companies normally
manage quite different businesses, each requiring its own strategy.
General Electric classified its businesses into 49 strategic business
units (SBUs). An SBU has three characteristics:
1. It is a single business or collection of related businesses that can
be planned separately from the rest of the company .
2. It has its own set of competitors.
3. It has a manager who is responsible for strategic planning and
profit performance and who controls most of the factors affecting
profit.

Company Product Definition Market Definition

Missouri pacific we run a railroad we are a people and
Rail road goods mover.
Xerox we make copying we help improve
office
equipment productivity
Standard Oil we sell gasoline we supply energy
Columbia pictures we make movies we market
entertainment Encyclopaedia
we sell encyclopaedias we distribute information
Britannica
Carrier we make air conditioners we provide climate
and furnaces control in the home.

Assessing Growth Opportunities:

Assessing growth opportunities involves planning new businesses,
downsizing, or terminating older businesses. The company’s plans for
 existing businesses allow it to project total sales and profits. If there
is a gap between future desire sales and projected sales, corporate
management will have to develop or acquire new businesses to fill it.
Intensive Growth: Corporate management’s first course of action
should be a review of opportunities for improving existing
businesses. One useful framework for detecting new intensive growth
opportunities is called a “product-market expansion grid.” The
company first considers whether it could gain more market share
with its current products in their current markets, using a market-
penetration strategy. Next it considers whether it can find or develop
new markets for its current products, in a market- development
strategy. Then it considers whether it can develop new products of
potential interest to its current markets with a product- development
strategy. Later the firm will also review opportunities to develop new
products for new markets in a diversification strategy.
Integrative Growth: A business can increase sales and profits
through backward, forward, or horizontal integration within its
industry.
Diversification Growth: Diversification growth makes sense when
good opportunities exist outside the present businesses-the industry
is highly attractive and the company has the right mix of business
strengths to be successful.
Several types of diversification are possible. First, concentric
strategy, Second, horizontal strategy, Finally, conglomerate
strategy.

Downsizing and Divesting Older Business: Weak businesses require a

dispropor tionate amount of managerial attention. Company must
carefully prune, harvest, or divest tired old businesses in order to
release needed resources to other uses and reduce costs.
Current Products New Products
Current markets 1. Market-Penetration 3. Product-development
strategy Strategy
New markets 2. Market-development 4. Diversification
strategy
strategy

Business Unit Strategic Planning:

The business unit strategic planning process consists of the steps given
below:
The Business Mission:
SWOT Analysis:
The overall evaluation of a company’s strengths, weaknesses,
opportunities, and threats is called SWOT analysis. It involves
monitoring the external and internal market environment.
External Environment (Opportunity and Threat) Analysis: A business
unit has to monitor key microenvironment forces (demographic,
economic, natural, technological, political, legal and social-cultural)
and significant microenvironment actors (customers, competitors,
suppliers, distributors, dealers) that affect its ability to earn profits.
Goal Formulation: Once the company has performed a SWOT analysis,
it can proceed to develop specific goals for the planning period. This
stage of the process is called Goal formulation. Most business units
pursue a mix of objectives including profitability, sales growth, market
share improvement, risk containment, and reputation. The business sets
these objectives and then managers by objectives. The unit’s objectives
must meet four criteria:
1. They must be arranged hierarchically, from the most to the least
important;
2. Objectives should be stated quantitatively whenever possible;
3. Goals should be realistic;
4. Objectives must be consistent.

Strategy Formulation: Strategic Alliances:

Overall cost Leadership, 1. Product or Service
alliances
Differentiation, 2. Promotional alliances
Focus. 3. Logistics alliances
4.Pricing collaborations.

Program Formulation and Implementation:

Feed back and Control:

Marketing Research:
Marketing Research as the systematic design, collection,
analysis, and reporting of data and findings relevant to a
specific marketing situation facing the company.

The Marketing Research process:

Define the problem and research objectives
↓
Develop the research plan
↓
Collect the information
↓
Analyze the information
 ↓
Present the findings
↓
Make the decision

Step 1: Define the problem, the Decision Alternatives, and

the Research Objectives:
Marketing managers must be careful not to define the
problem too broadly or too narrowly for the marketing
researcher.

Step 2: Develop the Research Plan:

The second stage of marketing research is where we develop
the most efficient plan for gathering the needed information
and what that will cost.
To design a research plan, we need to make decisions about the data
sources, research approaches, research instruments, sampling plan,
and contact methods.
Data Sources: Primary and Secondary Sources
Research Approaches: Observational Research, Ethnographic
Research, Focus Group Research, Survey Research,
Experimental Research and Questionnaires.

Step 3: Collect the Information:

Step 4: Analysis the Information:

Step 5: Present the Findings:
Step 6: Make the Decision:

Marketing Environment:
Identifying the Major Forces:
The Demographic Environment: The main demographic force
that marketers monitor is population, because people make
up markets. marketers are keenly interested in the size and
growth rate of population in cities, regions, and nations; age
distribution and ethnic mix; educational levels; household
patterns; and regional characteristics and movements.

Economic Environment: The available purchasing power in

an economy depends on current income, prices, savings,
debt, and credit availability. Marketers must pay careful
attention to trends affecting purchasing power, because they
can have a strong impact on business, especially for
companies whose products are geared to high-income and
price-sensitive consumers.
Natural Environment: The deterioration of the natural
environment is a major global problem. There is great
concern about “greenhouse gases” in the atmosphere due to
the burning of fossil fuels; about the depletion of the ozone
layer due to certain chemicals and global warming; and about
growing shortages of water.
New regulations hit certain industries very hard.

Technical Environment: one of the most dramatic forces

shaping people’s lives is technology. Through the years,
technology has released such wonders as penicillin, open-
heart surgery, and the birth control pill, and such horrors as
the hydrogen bomb, nerve gas, and the submachine gun.
Accelerating pace of change;
Unlimited opportunities for innovation; and
Varying R&D budgets.
• Increased regulation of Technological change

Political- Legal Environment:

 Market Segmentation
A market segment consists of a group of customers who
share a similar
set of needs and wants. The marketers’ task is to identify
them and decide
which one to target.
Segment marketing offers key benefits over mass marketing.
The company
can often better design, price, disclose, and deliver the
product or service
and also can fine-tune the marketing program and activities
to better
reflect competitors’ marketing.
We can characterize market segments in different ways. One
way is to
identify preference segments.
Homogeneous preferences exist when all consumers have
roughly the
samepreferences; the market shows no natural segments.

Consumers in diffused preferences vary greatly in their

preferences. If
several brands are in the market, they are likely to position
themselves
throughout the space and show real differences to match
differences in
consumer preference.
Clustered preferences result when natural market segments
emerge from
groups of consumers with shared preferences.

Niche Marketing:
A niche is a more narrowly defined customer group seeking a
distinctive
mix of benefits. The customer have a distinctive set of needs;
they will pay
a premium to the firm that best satisfies them; the niche is
fairly small but
has size, profit, and growth potential and is unlikely to attract
many other
competitors; and the richer gains certain economies through
specialization.
Bases for Segmenting Consumer Markets:
Geographic segmentation (region, city, rural and semi-urban
areas)
Demographic segmentation (age, family size, gender, income,
occupation,
education and socio-economic classification)
Psychographic segmentation (lifestyle, personality)
Behavioural segmentation (occasions, benefits, user status,
usage rate,
loyalty status, readiness stage, attitude toward product)
Service Marketing:
Services are those separately identifiable, essentially
intangible activities
which provide satisfaction, and that are not necessarily tied to
the sale of a
product or another service. To provide a service may or may
not require the
use of tangible goods.
Distinctive characteristics of service:
Services Marketing academics and practitioners argued that
services
required special treatment as a result of their distinctive
characteristics;
intangibility, inseparability, heterogeneity and perishability.
Credit cards;
Courier service;
Car Rental service;
Value added telecom services;
Fax service;
E-mail;
Video conferencing.
Consumer Behaviour:
Meaning: consumer behaviour can be defined as, “All
psychological, social
and physical behaviour of all potential consumers as they
become aware of,
evaluate, purchase, consume and tell others about product
and services”.
Consumer Buying Process:

Problem recognition
↓
Information search
↓
Evaluation of alternatives
↓
Purchase decision
↓
Post purchase behaviour
Information search :
Sources : personal: family, friends, neighbours.