Module 1

Marketing Management
Defining Marketing in 21st Century
 Module Objectives:

• To be able to know and understand :

• Why marketing important?
• What are the scope and fundamentals of marketing?
• What are the tasks necessary for successful marketing
management?
• How has marketing management changed?
 Module Introduction
• Good marketing is no accident, but a result of careful
planning and execution. Marketing practices are
continually being refined and reformed in virtually all
industries to increase the chances of success. But
marketing excellence is rare and difficult to achieve.
Marketing is both an art and a science.
• Marketing deals with identifying and
meeting human and social needs. One
of the shortest definitions of marketing
is “meeting needs profitably.”
 3 strategic developments
• globalization,
• technological advances, and
• deregulation—spell endless opportunities.
 The Scope of Marketing
• :
1. goods 6. places
2. services 7. properties
• 3. experiences 8. oganizations
4. events 9. information
5. persons 10. ideas
• Goods.
• Physical goods constitute the bulk of most countries’ production
and marketing effort. The United States produces and markets
billions of physical goods, from eggs to steel to hair dryers. In
developing nations, goods— particularly food commodities,
clothing, and housing—are the mainstay of the economy.
• Services.
• As economies advance, a growing proportion of their activities
are focused on the production of services. The U.S. economy
today consists of a 70–30 services-to-goods mix. Services include
airlines, hotels and maintenance and repair people, as well as
professionals such as accountants, lawyers, engineers, and
doctors. Many market offerings consist of variable mix of goods
and services.
• Experiences.
• By orchestrating several services and goods, one can
create, stage and market experiences. Walt Disney
World’s Magic Kingdom is an experience;so is the Hard
Rock Cafe.
• Events.
• Marketers promote time-based events, such as the
Olympics, trade shows, sports events, and artistic
performances.
• Persons.
• Celebrity marketing has become a major business.
Artists, musicians,CEOs, physicians, high-profile lawyers
and financiers, and other professionals draw help from
celebrity marketers.
• Places.
• Cities, states, regions, and nations compete to attract
tourists, factories, company headquarters, and new
residents.5 Place marketers include economic
development specialists, real estate agents, commercial
banks, local business associations, and advertising and
public relations agencies.
• Properties.
• Properties are intangible rights of ownership of either real
property (real estate) or financial property (stocks and
bonds). Properties are bought and sold, and this
occasions a marketing effort by real estate agents (for
real estate) and investment companies and banks (for
securities).
• Organizations.
• Organizations actively work to build a strong, favorable
image in the mind of their publics. Philips, the Dutch
electronics company, advertises with the tag line, “Let’s
Make Things Better.” The Body Shop and Ben & Jerry’s
also gain attention by promoting social causes.
Universities, museums, and performing arts organizations
boost their public images to compete more successfully
for audiences and funds.
• Information.
• The production, packaging, and distribution of information
is one of society’s major industries. Among the marketers
of information are schools and universities; publishers of
encyclopedias, nonfiction books, and specialized
magazines; makers of CDs; and Internet Web sites.
• Ideas.
• Every market offering has a basic idea at its core. In
essence, products and services are platforms for
delivering some idea or benefit to satisfy a core need.
• A marketer is someone seeking a response (attention, a
purchase, a vote, a donation) from another party called
the prospect.
• Marketers are skilled in stimulating demand for their
products. However, this is too limited a view of the tasks
that marketers perform. Just as production and logistics
professionals are responsible for supply management,
marketers are responsible for demand management.
 Defining Marketing
• Marketing is a societal process by which individuals and
groups obtain what they need and want through creating,
offering, and exchanging products and services of value
freely with others. (social definition)
• As a managerial definition, marketing has often been described as
“the art of selling products.” But Peter Drucker, a leading
management theorist, says that “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.”
• The American Marketing Association offers this
managerial definition:
• Marketing (management) is the process of planning and
executing the conception, pricing, promotion, and
distribution of ideas, goods, and services to create
exchanges that satisfy individual and organizational
goals.
• Marketing Management as the art and science of
applying core marketing concepts to choose target
markets and get, keep, and grow customers through
creating, delivering, and communicating superior
customer value.
 Five Basic Markets
• 1. Manufacturers Market
• 2. Resource Market- (raw materials market, labor market, money market)
• 3. Consumer Market
• 4. Government Market
• 5. Intermediary Market
Simple Marketing System
 Key Customer Market
• 1. Consumer markets
• 2. Business Markets
• 3. Global Markets
• 4. Non- Profit and Government Markets
 1. Consumer markets
Consumer markets are typically split into four primary
categories: consumer products, food and beverage
products, retail products, and transportation products.
Industries in the consumer markets often have to deal with
shifting brand loyalties and uncertainty about the future
popularity of products and services.
 2. Business Markets

• Marketplaces where organizations purchase raw

materials, natural resources and components of other
products for their resale or for use in manufacturing
another product. Business markets are generally made up
of businesses which buy products and raw materials for
their own operation.
 3. Global Markets
• Global marketing is defined as the process of adjusting
the marketing strategies of your company to adapt to the
conditions of other countries. Of
course, global marketing is more than selling your product
or service globally. It is the full process of planning,
creating, positioning, and promoting your products in
a global market.
 3. 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 (as an exporter, licensor, joint venture
partner, contract manufacturer, or solo manufacturer) 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.
 4. Non- Profit and Government Markets

• The government market mainly involves Government

offices, ordnance factories, army, navy and
other government departments. The non profits on the
other hand may involve groups based on different beliefs
some of which really have an excellent brand name and
are recognised by several companies. Both of these
entities have a limited purchasing budget and hence the
price of products is important. Accordingly the
purchase process is organized.
Marketplaces, Marketspaces, Metamarkets
• The marketplace is physical as when you shop in a store
, marketspace is digital as when you shop at the Internet
• Metamarket describes a cluster of complementary
products and services that are closely related in the
minds of consumers but are spread across a diverse set
of industries.
 Core Marketing Concepts
• i. Needs, Wants and demands
• ii. Target markets, positioning and segmentation
• iii. Offerings and Brands
• iv. Value and Satisfaction
• V. Marketing Channels
• Vi. Supply chain
• vii. Competition
• iv. Exchange, transactions and relationships
• v. Markets
• vi. Marketers are Prospects.
 Core Marketing Concepts
• 1. A need is a desire or wish that is physiological,
psychological, security, esteem and actualization
• Physiological needs are basic needs namely food, shelter, clothing, sex;
• security needs arise as man’s life is subject to all sorts of insecurities both
natural and artificial. He wants protection from these losses as he likes risk free
living.
• Esteem needs are the result of competition and jealous.
• Self-actualisation needs are those that bring him unusual, unique status which
is possible for very few people
• Majority of people fight for physiological needs, lesser safety needs, still lesser esteem need and
the least for self-actualisation.
• Wants:
• A want is something wanting a deficiency. A want in
marketing terminology means need plus ability to pay.
That is if we compare needs are countless than wants.
For instance, if you ask a question “do you want
mangoes? If, they are freely available, he says two for me
and three for my father in heaven.
• Demand:
• Demand is a situation where the person is willing to buy a product
and has the ability to pay for it. That demand is expression of
need supported by his purchasing power. That is, there is
difference between a need, and a want and demand.
• Need a mere wish,
• Want is a selected need in which he is really interested and
• Demand a clear cut commitment.
• That is an item of need may be want for someone else and
demand for other.
 ii. Target markets, positioning and segmentation

• Targeting, segmentation and positioning are all central to a

company's marketing strategy. Often referred to as S-T-P
marketing, segmenting, targeting and positioning involve
identifying possible market segments for your brand,
deciding which one to target for an ad campaign and how to
effectively position the benefits offered to the target
customers
 Segmenting the Marketing

• Market segmentation is a common technique used by companies

that have a large and varied marketplace. The idea is to organize
the total marketing into smaller groups of customers with shared
traits or interests to enable efficiency and effective advertising. A
number of approaches -- including demographics, lifestyles and
usage patterns -- are used to segment.
 Targeting a Segment

• The most influential advertising results when you deliver

messages to the right customers through the right media
and with the right benefits.
 Positioning a Brand

• When you attempt to market your brand, you typically do

so against one or more competitors vying for the same
customers or offering similar solutions. To succeed in
gaining customers, creating sales and building loyalty, you
must develop a distinctive positioning strategy.
 iii. Offerings and Brands
• 2. Marketing Offers:
• ‘Marketing Offer’ is the offer that marketing organisation or
marketer makes as per the requirements of a consumer. This
market offer stands for a product that satisfies the need of a
consumer in terms of quality, quantity, time, price, regularity, plane
and so on.
 iv. Value and Satisfaction

• Value as seen from the angle of customer, is the capacity of a

product or service from which consumer derives a certain level of
satisfaction.
• A value is judged by the level of satisfaction. Thus, if satisfaction
level is low, it means that product is of low value to the consumer
and vice versa.
• Satisfaction is a state of mind and cannot be measured as it
cannot be quantified. Here the concept of cost is very relevant.
Both producers and consumers are keenly interested in the cost.
 V. Marketing Channel
• · Marketing channels are channels used by any company
to reach their end customers. These channels are
generally interdependent on each other and interact with
each other so as to ensure that the product reaches from
the company to the end customer. An example
of marketing channels
v.a. Distribution Channels
[Link] channel
v.c. Service channel
 vi. Supply chain
• Supply chain activities involve the transformation
of natural resources, raw materials, and components into
a finished product that is delivered to the end customer.

• In business and finance, supply chain is a system of

organizations, people, activities, information, and
resources involved in moving
a product or service from supplier to customer.
 vii. Competition
• Competition is the rivalry between companies selling
similar products and services with the goal of achieving
revenue, profit, and market share growth.
• Market competition motivates companies to increase
sales volume by utilizing the four components of
the marketing mix, also referred to as the four P's.
 viii. Marketing Environment
• Competition represents only one force in the environment
in which the marketer operates. The marketing
environment consists of the task environment and the
broad environment.
• A. Task environment- includes the immediate actors
involved in producing, distributing, and promoting the
offering. The main actors are the company, suppliers,
distributors, dealers, and the target customers .
• B. The broad environment- consists of six components
• a. Demographic environment
• b. Economic environment
• c. Physical environment
• d. Technological environment
• e. Political-legal environment
• f. Social – cultural environment
 viii. Marketing Environment
• Marketing Environment. Definition: The Marketing
Environment includes the Internal factors (employees,
customers, shareholders, retailers & distributors, etc.) and
the External factors( political, legal, social, technological,
economic) that surround the business and influence
its marketing operations.
 The New Marketing Realities
• Major Societal Forces
• 1. Network information- The digital revolution has created and information
Age.
• Industrial age was characterized by mass production and mass consumption,
stores and stuffed with inventory , ads everywhere and rampant discounting.
• The information age- promises to lead to more accurate levels of production,
more targeted communications and more relevant pricing
• Electronic networks- intranets, extranets and the Internet
 Major Societal Forces
• 2. Globalization- Technological advance in transportation,
shipping and communication have made it easier for companies
to market in other countries and easier for consumer to buy
products and services from marketers in other countries.
• 3. Deregulation- many countries have deregulated industries to
create greater competition and growth opportunities. Companies
in telecommunication, domestic air travel, and electrical utilities
industries may face foreign competition and may enter other local
markets
 Major Societal Forces

• 4. Privatization- many countries such as China have converted

state owned enterprises to private ownership and management to
increase their efficiency.
• 5. Heightened competition- Brand manufacturers are facing
intense competition from domestic and foreign brands, which is
resulting in rising promotion costs and shrinking profit margin.
• 6. Industry convergence- industry boundaries are blurring at an
incredible rate as companies are recognizing that new
opportunities lie at the intersection of two or more industries
 Major Societal Forces

• 7. Retail transformation- small retailers are succumbing to the growing

power of giant retailers and “category killers”. Store based retailers are
facing growing competition from catalog houses; direct –mail firms ;
newspapers, magazine and TV direct to customer ads; home shopping
TV; and e-commerce on the Internet.
• 8. Disintermediation- the amazing success of early online dot-coms
such as Amazon, Yahoo!, eBay, E*Trade, and dozens of others who
created disintermediation in the delivery of products and services struck
terror in the hearts of many established manufacturers and retailers. In
response to distermediation , many traditional companies engaged in
reintermediation and became brick and click
 New Company Capabilities
• 1. Marketers can use the Internet as a powerful information and
sales channel
• 2. Researchers can collect fuller ad richer information
• 3. Managers can facilitate and speed internal communication
among their employees.
• 4. Companies can also facilitate and speed external
communication among customers.
• 5. Target marketing and two-way communication are easier
• 6. Marketers can send ads, coupons samples and information to
customers
 New Company Capabilities

• 7. Companies can reach consumer on the move

• 8. Firms can produce individually differentiated goods
• 9. Managers can improve purchasing, recruiting, training and
internal and external communication
• 10. Corporate buyers can achieve substantial savings by using
the internet to compare seller’s prices and to purchase materials
at auction or by posting their own terms
• 11. Firms can also recruit new employees online
 Company Orientations Toward the
Marketplace
Five orientations (philosophical concepts to the
marketplace have guided and continue to guide
organizational activities:

1. The Production Concept

2. The Product Concept
3. The Selling Concept
4. The Marketing Concept
5. The Societal Marketing Concept
 The Production Concept.
• This concept is the oldest of the concepts in business. It
holds that consumers will prefer products that are widely
available and inexpensive. Managers focusing on this
concept concentrate on achieving high production
efficiency, low costs, and mass distribution. .
• The Product Concept. This orientation holds that
consumers will favor those products that offer the most
quality, performance, or innovative features.
 The Selling Concept
• . This is another common business orientation. It holds
that consumers and businesses, if left alone, will
ordinarily not buy enough of the selling company’s
products. The organization must, therefore, undertake an
aggressive selling and promotion effort.
 The Marketing Concept
• It holds that the key to achieving its organizational goals
(goals of the selling company) consists of the company
being more effective than competitors in creating,
delivering, and communicating customer value to its
selected target customers. The marketing concept rests
on four pillars: target market, customer needs, integrated
marketing and profitability.
• Distinctions between the Sales Concept and the Marketing
Concept:
• 1. The Sales Concept focuses on the needs of the
seller. The Marketing Concept focuses on the needs of the
buyer.
• 2. The Sales Concept is preoccupied with the seller’s need to
convert his/her product into cash. The Marketing Concept is
preoccupied with the idea of satisfying the needs of the customer
by means of the product as a solution to the customer’s problem
(needs).
• The Marketing Concept represents the
major change in today’s company orientation
that provides the foundation to
achieve competitive advantage. This
philosophy is the foundation of consultative
selling.
• The Societal Marketing Concept. This concept holds
that the organization’s task is to determine the needs,
wants, and interests of target markets and to deliver the
desired satisfactions more effectively and efficiently than
competitors (this is the original Marketing
Concept). Additionally, it holds that this all must be done
in a way that preserves or enhances the consumer’s and
the society’s well-being.
 The Holistic Marketing Concept
• Holistic marketing considers a business and all its parts. It
sees a business as one entirety. As a result, it gives a
shared aim and purpose for each activity within a
business. And to everyone related to it. It thinks about a
business’s place in the wider society.
 Internal Marketing

• Internal marketing refers to the internal management of

system, the marketing department and the collaboration
between the marketing department and other
departments.
• Integrated marketing involves the pricing strategy,
product strategy, placing strategy, promotion strategy and
communication strategy.
Integrated Marketing
Communication Mix
• Performance Marketing
• Performance marketing is focused on different business activities, such as
how to sell a product, brand and customer equity, and the ethical and legal
responsibilities a business and product upholds.
• Financial accountability
• This accountability allows marketing to take responsibility for the profit or
loss from investments in marketing activities, and to demonstrate
the financial contributions of specific marketing programs to the
overall financial objectives of the firm, including brand asset value.
 Relationship Marketing

• Relationship marketing is centered on the relationship

you have with your customers, employees, partners and
competitors.
• By considering these four different principle components,
holistic marketing allows you to create a comprehensive
business plan that covers the whole business system.
 Communicating value.
• Communicate and prove your value and speed up
growth. Sales and marketing teams who communicate
value in a clear, convincing manner can influence
customers more effectively. Get this right and reduce the
length of the sales cycle, improve win rates and lower risk
of a 'no-decision' outcome.