Basics of Marketing Management 1

8/2/2019 Basics of Marketing Management 1

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Introduction to Marketing

Management


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The Nature of Marketing

What is Marketing?

An art

A science

A business function

A process

A relationship

A system


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What is Marketing?

Marketing is an organizational function

and a set of processes for creating,

communicating, and delivering value

to customers and for managing

customer relationshipsin ways that benefit the

organization and its stakeholders.


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What is Marketing Management?

Marketingmanagement is the

art and science

of choosing target markets

and getting, keeping, and growing

customers throughcreating, delivering, and communicating

superior customer value.


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For an exchange to occur..

There are at least two parties.

Each party has something that might be of

value to the other party.

Each party is capable of communication and

delivery.

Each party is free to reject the exchange

offer.

Each party believes it is appropriate or

desirable to deal with the other party.


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What is Marketed?

Goods

Services

Events

Experiences

Persons Places

Properties

Organization information ideas


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Demand States

Negative

Nonexistent

Latent

Declining

Irregular Unwholesome

Full

Overfull


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Key Customer Markets

Consumer markets

Business markets

Global markets

Nonprofit/Government markets


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Company Orientations

Production

Product

Selling

Marketing


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Marketing Mix and the Customer

Four Ps

Product

Price

Place

Promotion


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Marketing Mix and the Customer

Four Cs

Customer solution

Customer cost

Convenience

Communication


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Key Customer Markets

Consumer markets

Business markets

Global markets

Nonprofit/Government markets


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Core Concepts of Marketing

Product or Offering

Value and Satisfaction

Needs, Wants, and Demands

Exchange and Transactions

Relationships and Networks

Target Markets & Segmentation

Marketing Channels

Supply Chain

Competition

Marketing Environment


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What is the Purpose of Marketing?

Satisfaction

Functional Satisfaction

Psychological Satisfaction


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Adding Degrees of Satisfaction

Possession utility

Place utility

Time utility

Form utility

Calpol

Store has it instock

Delivered to yourhome

Pay with your VISAcard


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What is the Purpose of Marketing?Satisfaction

Functional Satisfaction Psychological Satisfaction

The Four Utilities

Consumer Problems

Providing Benefit Bundles

Offering a Total Consumption System


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Simple Marketing System

Industry

(a collection

of sellers)

Market

(a collection

of Buyers)

Goods/services

Money

Information

Communication


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A Three-Way Exchange

College

or

University

Parent

Student

Appreciation,grades, feeling ofaccomplishment

Money,encouragement

Parental recognition,

Sense of pride

Tuition, donations

Tuition, labor (workstudy), class attendance

Education, personalgrowth, sense of

independence and spirit


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Levi Strauss

Value-Delivery Network

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

Delivery

RetailoutletJobber

Order

Delivery

Order

Customer

Delivery

anufacturer

Order

Delivery

Order

Wholeseller


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The History of Marketing

The Four Eras

The Production Era

ProductEra

The Sales Era

The Marketing Era

The New Eras Non-Business Marketing

Strategic Marketing

Social Responsibility


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The Marketing Mix


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The Four Ps

The Four Cs

Product

Price Promotion

Place

CustomerSolution

CustomerCost Communication

Conven-ience

Marketing

Mix


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Marketing Management in the

Organization

Accounting

Finance

Human Resources

Marketing

Research & Development/Production

Marketing and the Organizational System

What Are the Functions in the OrganizationalProfit Pipeline?


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Marketing Management in the

Organization Which Organizational Function is the Most

Important?

None is More Important

Which Organizational Function Comes

First? Marketingand It Comes Last as Well


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The Processing Pipeline

OutputsInputs

Marketing Marketing

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

Goods/ Services,Sales (revenue),

Market share, Profits,Information


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Evolving Views of Marketings

Role

The customer as the controllingfunction and marketing as the

integrative function

Customer

Marketing

Production


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Customers

Front-line people

Middle Management

Top

Management

Traditional Organization Chart


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Customer-Oriented Organization

ChartCustomers

Front-line people

Middle management

Top

manage-

ment


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Inactive orex-customers

Customer Development

PartnersAdvocatesClientsRepeat

customersFirst-timecustomers

Suspects

Prospects

Disqualifiedprospects


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The Profit Triangle

Competitive advantage

Profit


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Quality

Quality is the totality

of features and

characteristics of aproduct or service that

bear on its ability to

satisfy stated orimplied needs.

#1


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Manufacturermarkets

Services,money

Services,money

ServicesServices,

money

Taxes

Taxes,goods

Taxes,goods

Taxes,goods

Money Money

Consumermarkets

Intermediary

marketsGoods, services

Goods, services

Resources Resources

Resourcemarkets

Money Money

Structure of Flows

Governmentmarkets

St i S t ti


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Steps in Segmentation,

Targeting, and Positioning

1. Identify thebasis for e

2. segmentations

2. Develop Profiles

of Resulting Segments

3. Develop Measures

of Segment Attractiveness

4. Select Target

Segment(s)

5. Develop Positioning

for Each Target Segment

6. Develop Marketing

Mix for Each Target Segment Market

Positioning

Market

Targeting

Market Segmentation

M k t S t ti


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Market Segmentation

Levels of Market Segmentation

Mass Marketing

Same product to all consumers(no segmentation)Segment Marketing

Different products to one or more segments

(some segmentation)

Micromarketing

oducts to suit the tastes of individuals or locations

(complete segmentation)

Niche Marketing

Different products to subgroups within segments

( more segmentation)


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9.35

Segmentation

Market segmentation is the process of dividing a heterogeneous

market into homogenous sub units. Need for segmentation

To be able to compete in a highly competitive market.

To position itself as segment leader.

To gain competitive edge.


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9.36

BASES FOR SEGMENTING THE MARKET

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

(c) Competition related segmentation

Customer Based Segmentation

Geographic location of customers:

RURAL vs. URBAN METRO vs. NON METRO


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9.37

Demographic Characteristic

Age

Sex

Child Pester Power

Youth Market

Income

Occupation

Gender

Education

Marital Status

Family Size & Structure

Psychographic Variables

Life Style

Personality

Buyer Readiness


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9.38

Product Related Segmentation

Product Use situationsDifferent customers may

use the same product in different situations.

Benefits SegmentationMarketers identifies

benefits that a customer looks for when buying a

product.

Quantity consumed- one of the basis of segmentation

beveragestea ,coffee,soft drinks,liquor and

cigarette markets.Following segments are visiblea) Heavy users

b) Moderate users

c) Li ht users


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9.39

Product Related Segmentation

Decision CriteriaUsed by customer to evaluate and buy a brand

or the product. Following four parameters are considered inconsumer decision making today

Price

Perceived quality of the product/ service

Service offered by the firm Technology


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9.40

Competition Based Segmentation

Hard Core Loyal

Soft Core Loyals

Switchers


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9.41

Three Stages of Market Segmentation

Survey Stage- Divided into two parts-

1) Focus group discussions & in depth interviews with a view to getting an

insight into consumer motivation,attitudes and behavior.

2) Based on this insight, developing a questionnaire for a sample group of

customers.

Analysis Stage using factor analysis. Identifying factors that differentiate

customer groups.

Profiling Stage- Each cluster is profiled in terms of demographics,

psychographics, media habits,attitudes,behavior and consumption habits.

Requirements for Effective Segmentation-

a) Accessibility

b) Measurable

c) Viable

d) Intensity in Competition.


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Business Level Strategy

Generic Strategies

Michael Porter identified three generic strategies

that can be implemented at the business unit level


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9.44

Market Place

Market Space

Meta market


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9.45

Holistic Marketing

Internal marketing

Integrated Marketing

CSRRelationship Marketing


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9.46

Market Research

Define the research objective

Develop the research plan

Collect the informationAnalyze the information

Present the findings

Make the decision


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9.47

Research approaches

Observational research

Focus group research

Survey research

Experimental research


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9.48

Types of questions

Dichotomous

Multiple choice

Likert scale

Semantic Differential

Importance scale

Rating scale

Intention to buy scale


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CUSTOMER DERIVED VALUE

The consumer considers the net value which is the excess of

total customer value given by a product over the total

customer cost.

CUSTOMER Total customer value

DERIVED = Total customer cost

VALUE


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CDV-Total Customer Value

Total Customer Value

Product Value Personnel Value Image ValueService Value

=

+ + +


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Product Value: It is given by its performance, reliability, longevity

and special characteristics.

Service Value : It represent for example ,treatment unavailable

elsewhere, lower interest rates, express sanctioning of loans for

credit card holders.

Personnel Value : The speed with which response is given.

Image Value: It associates a product with symbols and facilitators

that surrounds a product.

CDV-Total Customer Value


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CDV-Total Customer Cost

Total Customer Cost

Monetary Price Time Cost Energy Cost Psychic Cost

=

+ + +

VALUE CHAIN


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VALUE CHAIN

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


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Value Delivery Process

Choose the Value : Customer Segmentation, Market Selection / focus,

Value positioning

Provide the value : Product Development, Service Development,

Pricing, Sourcing, Making, Distribution, Servicing

Communicate the value : Sales force, Sales promotion, Advertising


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CUSTOMER PROFITABILITY ANALYSIS

Profitable customer is a person, household or company that

over time yields a revenue stream that exceeds the company's

cost stream of attracting, selling & servicing a customer

CPA = Revenues from customerTotal Costs*

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


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CUSTOMER PROFITABILITY ANALYSIS

CustomerProduct grid


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7.57

Stimu

lusCompany

ControlledProduct

Price

Advtg

Sales

Promotion

Display

Distribution

Social

Word of

Mouth

Consumer

Mind

(BlackBox)

Respon

se

Buy

NoBuy

Customers Today


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7.58

Drivers of Change

Media Borderless

Competition

Technology

(eg. Developments in

Medical Sciences, Genetics,

Bio technology, Computers,

Virtual Technologies etc.)

CUSTOMER

Influence InfluenceInfluence

Awareness Values: eg. Defer Pleasure

& consumption vs. Instant

Pleasure & Consumption

Social Structures: Individualism

vs. Collectivism; Breaking up of

Groups, Individual Identity,

Role of Opinion, Leadership

Personality:

Assertiveness?

Exhibitionism?

Perceived Self-concept (!)

Lifestyle

Aspirational (!)

Customer Decision Making Process

Impact

Affect

Customers Today


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7.59

Decision Making Process

Need Recognition/ProblemIdentification

Development of Decision Criteria

Search for Alternatives

Evaluation of Alternatives

Decision

High Involvement Products


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7.60

Types of Buying Situations

Routinised response behaviour- Straight Rebuy

Limited problem solving and- Modified Rebuy

Extensive problem solving- New Task

Buyer Motivators


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Buyer Motivators

Economic Factors Human beings being rationalindividualsevaluates various alternatives and will buy or select those where

the marginal utility is more than the marginal price he or she paidfor it.

Psychological Factors- These are Motivation / Learning /Perception

Motivation

According to Sigmund Freud-man learns from hisenvironment.

Several theories are used to understand motivation levels-

Maslows need hierarchy theory

Herzbergs two factor theory McClellands Theory of Achievement Motivation


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7.62

Total

Set

(All

Brands)

Awareness

Set

(Brands

Aware of)

Consideration

Set

(Brands

considered)

Decision

Set

(Brand

Decided)

Purchase

Set

Theory of Evoked Set


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7.63

Categorisation of Customer based

on life styles:1. Survivors: These are disadvantaged people who tend to bedespairing, depressed and withdrawn

2. Sustainers: are disadvantaged people who are valiantly

struggling to get out of poverty.

3. Belongers: are individuals who are conventional, conservative,

nostalgic and unexperimental and who would rather fit in than

stand out.

4. Emulators: are ambitious, upwardly mobile and statusconscious; they want to make it big.

5. Achievers: are the nations leaders, who make things happen,

work within the system and enjoy the good life.


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7.64

Experiential Marketing

Analyze the experiential world of the customer

Building the experiential platform

Designing the experience

Structuring the customer interface Engaging in continuous innovation


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7.65

Steps in segmentation process

Need based segmentation

Segment attractiveness

Segment profitability Segment positioning

Marketing mix strategy


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7.66

Target marketing strategies

Single segment concentration

Selective specialization

Product specialization Market specialization

Full market coverage


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7.67

Positioning

Product

Service

Channel Price

People

Image


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7.68

Tasks in Positioning Deciding the locus in consumers mind

Analyzing the competitors positioning

Fixing the differentiation plank

Ensuring the competitive advantage for delivering the promise

Developing the value proposition Communicating the value proposition to the customers

Monitoring how the positioning is fairing in the market

Repositioning if required

L l f t t i


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Levels of strategies

Corporate Level Strategy


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Corporate Level Strategy

The Corporate Portfolio Framework An Approach to corporate level strategy advocated by the

Boston Consulting Group , also known as the BCG Matrix


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Five Forces Corporate strategy

Another well known approach to corporate strategy is

Michael Porters Five Force Model An organization's ability to compete in a given market is

determined by the five environmental forces which

threatens the organizations venture into the new market.


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Business Level Strategy

Generic Strategies

Michael Porter identified three generic strategies

that can be implemented at the business unit level


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Corporate & Division strategic

planning

Defining the corporate mission Establishing sbus

Assigning resources to sbu

Assessing growth opportunities


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Business unit strategic planning

Business mission

SWOT Goal formulation

Strategy formulation

Program formulation Implementation

Control


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Product plan/ Marketing Plan

Executive summary

Situation analysis

Marketing strategy Financial projection

Implantation & control


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Customer analysis Who are the consumers of the firm

According to firm what need it serves to consumers

According to consumers what need does it serve

Is there any gap in these two perceptions

What benefits do customer look for in the product What is their priority benefit

Customers assessment of the value

Purchasing power of the consumer

Buying motives, buying habits

Personality traits & lifestyle Brand loyalty

Brand Switching behavior

Who among the competition remained closest to the customers.

Basics of Marketing Management 1

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