Marketing Management[1]

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MARKETING MANAGEMENTMARKETING MANAGEMENT

CORE TEXT: MARKETING MANAGEMENTCORE TEXT: MARKETING MANAGEMENTBY PHILIP KOTLER (11BY PHILIP KOTLER (11thth Edition) Edition)

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INTRODUCTION TO INTRODUCTION TO MARKETING MANAGEMENTMARKETING MANAGEMENT

Ref: Chapter 1 of Core TextRef: Chapter 1 of Core Text

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MARKETING MANAGEMENT: MARKETING MANAGEMENT: DEFINITIONSDEFINITIONS

1. “Marketing is the creation and delivery of a standard of living”.

2. “Marketing is a managerial and societal process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products and services of value with others”.


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THE SCOPE OF MARKETINGTHE SCOPE OF MARKETING

Marketers are involved with marketing ten types of entities:1. Physical Goods2. Services

3. Experiences4. Events

5. Persons

6. Places

7. Properties

8. Organizations

9. Information

10. Ideas


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A SIMPLE MARKETING SYSTEMA SIMPLE MARKETING SYSTEM

INDUSTRYINDUSTRY(A collection(A collectionof sellers)of sellers)

MARKETMARKET(A collection(A collectionof buyers)of buyers)

COMMUNICATIONCOMMUNICATION

INFORMATIONINFORMATION

GOODS & SERVICESGOODS & SERVICES

MONEYMONEY


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STRUCTURE OF FLOWS IN A MODERN EXCHANGE STRUCTURE OF FLOWS IN A MODERN EXCHANGE ECONOMYECONOMY

RESOURCERESOURCEMARKETSMARKETS

CONSUMERCONSUMERMARKETSMARKETS

INTERMEDIARYINTERMEDIARYMARKETSMARKETS

MANUFACTURERMANUFACTURERMARKETSMARKETS

GOVERNMENTGOVERNMENTMARKETSMARKETS

MONEYMONEY

RESOURCESRESOURCES

MONEYMONEY

RESOURCESRESOURCES

MONEYMONEY MONEYMONEY

GOODS & SERVICESGOODS & SERVICES GOODS & SERVICESGOODS & SERVICES

TAXES &TAXES &GOODSGOODS

SERVICESSERVICES& MONEY & MONEY

S&MS&M

TAXES &TAXES &GOODSGOODS

SERVICESSERVICES

TAXESTAXES

S&MS&M T&GT&G

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MARKETING CONCEPTS-IMARKETING CONCEPTS-I There are five competing concepts under which

organizations conduct marketing activities: The PRODUCTION CONCEPT holds that

consumers will prefer products that are widely available and inexpensive.

The PRODUCT CONCEPT holds that consumers will favor those products that offer the most quality, performance, or innovative features.

(continued)


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MARKETING CONCEPTS-IMARKETING CONCEPTS-I The SELLING CONCEPT holds that consumers

and businesses, will ordinarily not buy enough of the organization’s products. The organization must therefore, undertake an aggressive selling and promotion effort.

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

(continued)(continued)


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MARKETING CONCEPTS-IMARKETING CONCEPTS-I

The SOCIETAL MARKETING concept holds that the organization’s task is to determine the needs, wants, and interests of the target markets and to deliver the desired satisfactions more effectively than competitors in a way that preserves the consumers’ and society’s well-being.


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MARKETING CONCEPTS-IIMARKETING CONCEPTS-II

The Core Concepts of MarketingNeedsNeeds

WantsWants

DemandsDemands

ProductsProducts

ValueValue

CostCost

SatisfactionSatisfaction

ExchangesExchanges

TransactionsTransactions

RelationshipsRelationships

MarketsMarkets

MarketingMarketing

MarketersMarketers

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CUSTOMER CUSTOMER RELATIONSHIPSRELATIONSHIPS


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CREATING CUSTOMER VALUE AND CREATING CUSTOMER VALUE AND SATISFACTIONSATISFACTION

Customer delivered value: the difference between total customer value and total customer cost.

Total customer value: the bundle of benefits customers expect from a given product or service.

Total customer cost: the bundle of costs customers expect to incur in evaluating, obtaining, using, and disposing of the product or service.

(continued)(continued)


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CREATING CUSTOMER VALUE AND CREATING CUSTOMER VALUE AND SATISFACTIONSATISFACTION

Example of Customer Delivered Value:

a) Buyers perception of offer’s worth =

Rs.2,00,000=00

b) Company’s cost of manufacture =

Rs.1,40,000=00

c) Company’s price = Rs.1,60,000=00

1. Customer Delivered Value: = Rs.40,000=00

2. Customer Delivered Value: = 1.25 (as a ratio)

(continued)(continued)Ref: Chapter 2 of Core TextRef: Chapter 2 of Core Text

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CREATING CUSTOMER VALUE CREATING CUSTOMER VALUE AND SATISFACTION AND SATISFACTION

Customer Satisfaction: Whether a customer is satisfied after purchase depends on the offer’s performance in relation to the buyer’s expectations. We may define it as:

“Customer satisfaction or dissatisfaction is a person’s feeling of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to the person’s expectations”.


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THE NATURE OF HIGH THE NATURE OF HIGH PERFORMANCE BUSINESSESPERFORMANCE BUSINESSES

STAKEHOLDERSSTAKEHOLDERS

PROCESSESPROCESSES

RESOURCESRESOURCES ORGANIZATIONORGANIZATION

Set strategiesSet strategiesto satisfy keyto satisfy keystakeholders …stakeholders …

… … by improvingby improvingcritical businesscritical businessprocesses …processes …

… … and aligningand aligningresources andresources andorganization. organization.

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MARKET-ORIENTED MARKET-ORIENTED STRATEGIC PLANNINGSTRATEGIC PLANNING


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STRATEGIC PLANNING:STRATEGIC PLANNING:THE FOUR LEVELSTHE FOUR LEVELS

Most large companies consist of four organizational levels:

The Corporate level The Division level The Business Unit level The Product level


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THE STRATEGIC PLANNING, IMPLEMENTATION & THE STRATEGIC PLANNING, IMPLEMENTATION & CONTROL PROCESSESCONTROL PROCESSES

PLANNINGPLANNING IMPLEMENTINGIMPLEMENTING CONTROLLINGCONTROLLING

CorporateCorporatePlanningPlanning

DivisionDivisionPlanningPlanning

BusinessBusinessPlanningPlanning

ProductProductPlanningPlanning

OrganizingOrganizing

ImplementingImplementing

MeasuringMeasuringResultsResults

DiagnosingDiagnosingResultsResults

TakingTakingCorrectiveCorrectiveActionAction

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DEFINING THE CORPORATE DEFINING THE CORPORATE MISSIONMISSION

Peter Drucker’s Classic Questions:

1. What is our business?

2. Who is the customer?

3. What is value to the customer?

4. What will our business be?

5. What should our business be?

Ref: Chapter 4 of core TextRef: Chapter 4 of core Text

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GOOD MISSION STATEMENTSGOOD MISSION STATEMENTS

Good mission statements have three major characteristics:1. They focus on limited number of goals.2.They stress the major policies and values the company wants to honor.3. They define the major competitive scopes within which the company will operate.


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COMPETITIVE SCOPES OF A COMPETITIVE SCOPES OF A COMPANYCOMPANY

Industry scopeProducts and applications scopeCompetence scopeMarket segment scopeVertical scopeGeographical scope


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ESTABLISHING STRATEGIC ESTABLISHING STRATEGIC BUSINESS UNITSBUSINESS UNITS

Large companies normally manage different businesses, each requiring its own strategy. These are termed as 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 who is responsible for strategic

planning and profit performance and who controls most of the factors affecting profit.


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ASSIGNING RESOURCES TO SBUsASSIGNING RESOURCES TO SBUs(THE BCG GROWTH-SHARE MATRIX)(THE BCG GROWTH-SHARE MATRIX)

The Boston Consulting Group (BCG), a leading

management consulting firm, popularized the growth-

share matrix. It is divided into four cells, each

indicating a different type of business. The market-

growth rate on the vertical axis indicates the annual

growth rate of the market in which the business

operates. The relative market share, measured on the

horizontal axis, refers to the SBUs market share

relative to that of the largest competitor in the segment.


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THE BCG GROWTH-SHARE MATRIXTHE BCG GROWTH-SHARE MATRIX

10%

0%

20%

1x10x 0.1x

STARS QUESTION MARKS

CASH COWS

DOGS

RELATIVE MKT SHARERELATIVE MKT SHARE

MKTMKTGROWTHGROWTH

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THE BCG MARIX (CONTD)THE BCG MARIX (CONTD) QUESTION MARKS: New businesses of the company in high

growth-rate markets.

STARS: Successful Question-mark businesses become stars that gain market share and generate profits for the company.

CASH COWS: When market-growth rate slows down as competitors enter the segment, businesses that remain successful become Cash Cows. They fund Stars and new Question-mark businesses.

DOGS: These are businesses in decline and the company has the option to “harvest” or “divest”.

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THE MARKETING PROCESSTHE MARKETING PROCESS

The Marketing Process consists of: Analyzing Marketing Opportunities Researching and Selecting Target Markets Designing Marketing Opportunities Planning Marketing Programs Organizing, Implementing, and

Controlling the Marketing Effort

Ref: Chapter 4 of Core Text

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MARKETING MARKETING ENVIRONMENT & SYSTEMENVIRONMENT & SYSTEM


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MARKETING ENVIRONMENT MARKETING ENVIRONMENT FACTORSFACTORS

DEMOGRAPHIC ENVIRONMENTECONOMIC ENVIRONMENTNATURAL ENVIRONMENTTECHNOLOGICAL ENVIRONMENTPOLITICAL-LEGAL ENVIRONMENTSOCIAL-CULTURAL ENVIRONMENT


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DEMOGRAPHIC ENVIRONMENTDEMOGRAPHIC ENVIRONMENT

Worldwide Population Growth Population Age Mix Ethnic Markets Educational Groups Household Patterns Geographical Shifts in Population Shift from Mass to Micromarkets


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ECONOMIC ENVIRONMENTECONOMIC ENVIRONMENT

Income Distribution Subsistence economies Raw-material-exporting economies Industrializing economies Industrial economies Savings, Debt, and Credit Availability


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NATURAL ENVIRONMENTNATURAL ENVIRONMENT Shortage of Raw Materials

Increased Energy Costs

Increased Pollution Levels

Changing Role of Governments


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TECHNOLOGICAL TECHNOLOGICAL ENVIRONMENTENVIRONMENT

Accelerating Pace of Technological Change

Unlimited Opportunities for Innovation Varying R&D Budgets Increased Regulation of Technological

Change

Ref: Chapter 6 of Core Text Ref: Chapter 6 of Core Text

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POLITICO-LEGAL POLITICO-LEGAL ENVIRONMENTENVIRONMENT

Legislation Regulating Business: MRTP Act PCBs FDAGrowth of Special Interest Groups


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SOCIO-CULTURAL SOCIO-CULTURAL ENVIRONMENTENVIRONMENT

Persistence of Core Cultural Values:Core beliefsSecondary beliefs

Existence of Subcultures

Shifts of Secondary Cultural Values Through Time


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ANALYZING CONSUMER ANALYZING CONSUMER BEHAVIORBEHAVIOR


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ANALYZING CONSUMER ANALYZING CONSUMER BEHAVIORBEHAVIOR

FACTORS INFLUENCING CONSUMER BEHAVIOR

BUYING ROLES

TYPES OF BUYING BEHAVIOR

THE BUYING DECISION PROCESS


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FACTORS INFLUENCING FACTORS INFLUENCING CONSUMER BEHAVIORCONSUMER BEHAVIOR

CULTURAL FACTORS: Culture Sub-culture Social ClassSOCIAL FACTORS: Reference groups Family Roles & statuses


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FACTORS INFLUENCING FACTORS INFLUENCING CONSUMER BEHAVIOR(2)CONSUMER BEHAVIOR(2)

PERSONAL FACTORS Age and Life-Cycle Stage Occupation Economic Circumstances Lifestyle Personality & Self-concept


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FACTORS INFLUENCING FACTORS INFLUENCING CONSUMER BEHAVIOR (3)CONSUMER BEHAVIOR (3)PSYCHOLOGICAL FACTORS

Motivation Learning Perception Beliefs & Attitudes


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BUYING ROLESBUYING ROLES

INITIATOR: The first person to suggest the idea of buying.

INFLUENCER: A person whose views impact the buying decision.

DECIDER: The person who decides on what, when & where to buy the product or service.

BUYER: The actual purchaser. USER: The person who uses/consumes the

product or service.


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TYPES OF BUYING BEHAVIORTYPES OF BUYING BEHAVIORDEGREE OF INVOLVEMENT

LOWHIGH

DEGREE OFDIFFERENCESIN BRANDS

HIGH

LOW

COMPLEXBUYINGBEHAVIOR

DISSONANCE-REDUCINGBUYINGBEHAVIOR

VARIETY-SEEKINGBUYINGBEHAVIOR

HABITUALBUYINGBEHAVIOR

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TYPES OF BUYING BEHAVIORTYPES OF BUYING BEHAVIOR

COMPLEX BUYING BEHAVIOR: High involvement, very expensive, infrequently purchased,very risky, self-expressive products (designer jewelry, custom-designed sports cars, housing).

DISSONANCE REDUCING BUYING BEHAVIOR: High involvement, expensive, infrequently purchased, self-expressive products (furniture, white goods, PCs).


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TYPES OF BUYING BEHAVIOR TYPES OF BUYING BEHAVIOR (CONTD)(CONTD)

VARIETY SEEKING BUYING BEHAVIOR: Low involvement, frequently purchased, inexpensive products (pastries, biscuits, snacks).

HABITUAL BUYING BEHAVIOR: Low involvement, frequently purchased, inexpensive products (sugar, salt, flour, commodities).


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THE BUYING DECISION PROCESSTHE BUYING DECISION PROCESS

Problem/need Recognition

Information Search

Evaluation Of Alternatives

Purchase Decision

Postpurchase Behavior


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PROBLEM/NEED RECOGNITIONPROBLEM/NEED RECOGNITION

From Internal Stimuli: Hunger Thirst Fear

From External Stimuli: Neighbor’s Purchases Advertisements Window Shopping Newspapers & Magazines


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INFORMATION SEARCHINFORMATION SEARCH

From Personal Sources:

Family Friends Neighbors Acquaintances

From Commercial Sources:

Advertisements Dealers Salespersons Packaging Displays


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INFORMATION SEARCH INFORMATION SEARCH (CONTD)(CONTD)

From Commercial Sources:AdvertisementsDealersSalespersonsPackagingDisplays


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INFORMATION SEARCH INFORMATION SEARCH (CONTD)(CONTD)

From Public Sources:

Mass Media Chambers of

Commerce Consumer Rating

Magazines

From Experiential Sources:

Handling the Product

Examining the Product

Using the Product


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EVALUATION OF ALTERNATIVESEVALUATION OF ALTERNATIVES

Successive Sets in Consumer Decision-Making:

Total Set Awareness Set Consideration Set Choice Set Buying Decision

(continued)


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EVALUATION OF ALTERNATIVES EVALUATION OF ALTERNATIVES

TOTAL SET

AWARENESSSET

CONSIDERATIONSET

CHOICESET

BUYINGDECISION


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PURCHASE DECISIONPURCHASE DECISION

Interfering Factors: Attitudes of Others: Opposing and intense

opinions of family members, close friends and acquaintances

Unanticipated situational factors: Changes in income, job transfer, loss of employment, change of priority e.g. sudden payment of educational fees etc.


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POSTPURCHASE BEHAVIORPOSTPURCHASE BEHAVIORPost purchase Satisfaction: Keep the Product Store the Product Convert to a Second UsePost purchase Dissatisfaction: Try to return the product/take legal recourse Rent it Get rid of it/Throw it


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BUSINESS MARKETS VERSUS BUSINESS MARKETS VERSUS CONSUMER MARKETSCONSUMER MARKETS

Business Markets: Fewer Buyers Larger Buyers Close Supplier-

Customer Relationship

Geographically Concentrated Buyers

Inelastic Demand

Derived Demand Professional

Purchasing Multiple Buying

Influences Direct Purchasing Reciprocity Leasing


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MARKET SEGMENTATIONMARKET SEGMENTATION


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MARKET SEGMENTATION: MARKET SEGMENTATION: VARIABLESVARIABLES

Geographic Segmentation

Demographic Segmentation

Psychographic Segmentation

Behavioral Segmentation


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SEGMENTATION VARIABLES SEGMENTATION VARIABLES (CONTD)(CONTD)

Geographic Segmentation: By Nations By Regions By States By Cities By Localities


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Demographic Segmentation: By Age By Gender By Income By Education Level By Religion/Race By Nationality


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Psychographic Segmentation:

By Personality

By Lifestyle

By Social Class


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Behavioral Segmentation:

By Usage Pattern By Occasion By Loyalty Factor By Attitude Towards The Products


Marketing Management[1]

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