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Marketing Management I
Assessment Weightage
Criteria
Marks/Weightage
Session
OLT
10
7
Comprehensive
Voce
Coursework/ Project
Viva 10
Preceding week of End
Term Exam
20
9
Case Study/ Mid Term 10
Exam
4
End Term Exam
50%
End of Trimester
Total
100%
Marketing and Kipling ????????
I have six honest serving men
They taught me all I knew
I call them Why and When and
Where
And How and What and Who
Marketing
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What is Marketing ????
Is it Selling ?
Is it Advertising ?
Is it Pricing ?
Is it retailing or wholesaling ?
Is it e- business ?
Is it ?????
Is it a Department ?
Definitions of Marketing
• “Marketing is selling goods that don’t come
back to people that do.”
• “Marketing is about being best at something
important to your customer.”
• “Meeting needs profitably”
• “Marketing is the management process
responsible for identifying, anticipating and
satisfying customer requirements profitably”.
(Chartered Institute of Marketing)
• Marketing is the activity, set of institutions,
and processes for creating, communicating,
delivering, and exchanging offerings that
have value for customers, clients , partners
and society at large, ( American Marketing
Association)
Kotler’s social definition
“Marketing is a societal process through
by which individuals and groups obtain
what they need and want through creating,
offering,and freely exchanging products
and services of value with others”.
Marketing defined
•
In a narrower practical business context :
Marketing involves building profitable, valueladen exchange relationships with customers.
• “Marketing is the process by which companies
create value for customers and build strong
customer relationships in order to capture
value from customers in return”.
Marketing Process
Selling Vs Marketing
• Selling is getting rid off something you’ve
got.
• Marketing is having something that you
can get rid off.
• In a selling orientation a company
emphasizes its products/technology with
the main objective of maximizing sales.
• A marketing orientation begins with needs of
the prospective users of a product or
technology, details of the product designed
are driven by the customer’s requirements.
• Profits will result by having satisfied
customers.
Launches based on Marketing
homework : Meeting Customer needs
• Nintendo designing Wii game system (Nintendo states
that its console targets a broader demographic than that
of its competitors).
• Canon launching ELPH Digital cameras. (Canon's highend PowerShot digital cameras incorporate the creative
performance of a professional digital SLR camera and
the compact convenience of a point-and-shoot.)
•
Toyota Prius hybrid automobile .
• Prius is the world’s most iconic hybrid,
combining incredible aerodynamic
efficiency with unmistakable styling.
• Almost every inch of the body of Prius was
designed with a purpose: cheating the
wind. Flowing lines and purposeful edge
detailing conspire to reduce wind
resistance for a quieter ride and greater
fuel efficiency.
The Marketing Concept
• A philosophy of business maintaining that the
satisfaction of customer needs and wants is
the economic and social reason for a firm’s
existence and that the firm should therefore
direct its activities towards fulfilling those
needs and wants, yielding at the same time,
long-term profitability.
Marketing-a frame of mind
• Marketing is not to be thought of as the
function of a particular office or
department
• It is an attitude of mind, an approach to
business problems to be adopted by the
whole organization from chief executive
downwards.
• Everyone in an organization should realize that
without customers there is no business and
hence no job. The customer in effect pays
your salary.
• Thus, all departments must work together as
an integrated unit with a common purposesatisfying customer’s needs and wants
The Big Picture
The business enterprise has two and only
two basic functions :
Marketing and Innovation. Marketing and
innovation produce results; all the rest are
costs.
( Peter Drucker : The Practice of Management)
Everybody is Marketing
• Accounting – Develops a format customers
can understand.
• Finance - Gives customers flexible payment
options
• HR – When it takes out a Recruitment ad
• Logistics team - Calling on a customer to
coordinate supply chains
• Operations - When the receptionist smiles at
the customer during a hotelcheck -in
A new automobile product
• What goes into it ?
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Marketing
Product Development
Purchasing
Finance
Manufacturing
External suppliers
The customer receives the outcome of several
cross – functional processes
3 mutually reinforcing changes
Are enabling faster and more coherent
coordination of value creating activities within
organizations :
•
Companies are thinking in terms of
processes rather than functions
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Moving from hierarchies to teams
•
Towards Partnerships from arms – length
transactions with suppliers and distributors
Why is Marketing Important to
you ?
• Because……From your Nike shoes, to your
Benetton T Shirt to the McDonalds Burger that you
eat you have been successfully marketed a product.
• Whether you drive a Wagon R , A Ritz or a
Mercedes, you have been the end product of a
marketing process
• Marketing is apparent in every aspect of your life
including the resume with which you market yourself
to a prospective employer
• Because…..you as a consumer pay for the
cost of marketing activities. In advanced
economies marketing costs 50 cents out of
each consumer dollar.
• Because….Marketing is often the route to
the top in a career
• Because… even non - marketing people
work with marketers.
• Because…marketing principles apply even
to non profit organizations.
• Because….marketing plays a large part in
economic growth and development.
Selling is only the tip of the iceberg
“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. All that should be
needed is to make the product or
service available.”
Peter Drucker
1-25
What is Marketing Management?
Marketing management is the
art and science
of choosing target markets
and getting, keeping, and growing
customers through
creating, delivering, and communicating
superior customer value.
1-26
Challenges before CEOs
Among the top 5 challenges faced by
CEOs worldwide :
• Sustained and steady top line growth
• Customer loyalty/Retention
Both are largely dependent on Marketing
CEOs recognize
The importance of Marketing in building
brands and a loyal customer base, intangible
assets that make up a large percentage of the
value of a firm
The permanent challenge is :
Change
Re – thinking business models
“Change or die”
WHAT IS MARKETED?
What is Marketed?
Goods
Services
Events & Experiences
Persons
Places & Properties
Organizations
Information
Ideas
1-31
Definitions
A Marketer is someone who seeks a response
- Attention, a purchase, a vote a donation –
from another party called the prospect
Marketers are responsible for demand
management.
Demand can have several avatars
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Negative
Non – existent
Latent
Declining
Irregular
Full
Overfull
Unwholesome
Vaccination
Insurance Policies
Walkman
VCRS, Pagers
Hotel Rooms
Ideal, seldom achieved
Movie tickets
Cigarettes, alcohol
Marketer’s task
To identify the cause of each demand state
and try to shift it to a more favorable one
Markets
• A collection of buyers and sellers who
transact over a particular product or product
class ( eg. housing market, grain market)
Flows in a Modern Exchange
Economy
Simple Marketing System
Key Customer Markets
Consumer Markets
Global Markets
Business Markets
Nonprofit/ Government
Markets
1-38
Consumer Markets
• Companies selling mass consumer
goods and services such as juices,
cosmetics, athletic shoes, and air travel
spend a great deal of time establishing a
strong brand image
• by developing a superior product and
packaging, ensuring its availability, and
backing it with engaging communications
and reliable service.
Global markets
• Companies in the global marketplace must
decide which countries to enter;
• how to enter each (as an exporter,
licenser, joint venture partner, contract
manufacturer, or solo manufacturer); how
to adapt product and service features to
each country; how to price products
in different countries; and how to design
communications for different cultures.
They face different requirements for
buying and disposing of property; cultural,
language, legal and political differences;
and currency fluctuations. Yet, the payoff
can be huge
Nonprofit and Governmental
Markets
Companies selling to non - profit
organizations with limited purchasing
power such as churches, universities,
charitable organizations, and government
agencies need to price carefully. Lower
selling prices affect the features and
quality the seller can build into the offering.
Much government purchasing calls for
bids, and buyers often focus on
practical solutions and favor the lowest bid
in the absence of extenuating factors.
Marketplaces, Marketspaces,
Metamarkets
The marketplace is physical – a store
Marketspace is digital – shopping on the
internet
Metamarket is a cluster of complementary
products and services closely related in the
minds of customers but spread across a
diverse set of industries –eg Financial
services for loans to purchase cars, buyers
and sellers web –sites for used cars
Functions of CMOs
• Strengthening the brands
• Measuring marketing effectiveness
• Driving new product development based on
customer needs
• Gathering meaningful customer insights
• Utilizing new marketing technology.
Stephen Ginns
Core Marketing Concepts
• Needs, wants, and
demands
• Target markets,
positioning,
segmentation
• Offerings and brands
Stephen Ginns
• Value and satisfaction
• Marketing channels
• Supply chain
• Competition
• Marketing
environment.
Needs, wants, demands
• Needs are basic human requirements –air,
water, food , clothing etc. Also, recreation,
education, entertainment
Needs become wants when they are directed
to specific objects that might satisfy the need.
Thus quenching your thirst is a need .Having a
Pepsi is a want
Wants are shaped by society.
• Marketers do not create needs. These preexist marketers. Marketers, along with other
societal factors, influence wants.
• Thus a Marketer can promote the idea of a
BMW being a symbol of your having
arrived. But he cannot create your need for
social status.
• Demands are wants for specific products
backed by ability to pay. Thus willingness and
ability to pay are what concerns a marketer.
Understanding needs is not
simple : I want it, I need it…
5 Types of Needs
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Stated needs
Real needs
Unstated needs
Delight needs
Secret needs
1-50
Stated needs ( I want an inexpensive car)
Real needs ( I want a car whose operating
costs are low, not the initial cost of buying)
Unstated needs ( I want good service from the
dealer)
Delight needs ( An onboard navigation
system)
Secret needs ( Friends should see me as a
savvy consumer)
Companies must help consumers learn
what they want
Target Markets, Positioning,
Segmentation
• To cater to different wants marketers divide
markets into segments.
• They identify and profile distinct groups of
buyers who might prefer or require varying
products and service mixes by looking at
demographic, psychographic and behavioural
differences among buyers
Target markets
• From among the identified segments the
market/s with the greatest opportunity is /are
chosen as the target market/s.
• For each target market a firm develops a
market offering ( a combination of product,
services, information or experiences offered
to a market to satisfy a need or a want).
Positioning
• The market offering is then positioned in the
minds of the target buyers as delivering some
central benefits.
• Volvo - SAFETY
• Scorpio - Luxury of a car plus thrill of a SUV
• Pepsi - Fun “Nothing official about it” or
the “Joy of Pepsi”
• Volkswagen - Rational : Affordable and
German engineered Emotional : A different
driving experience
Predictably..
Companies perform best when they choose
their target markets carefully and prepare
tailor -made marketing programmes
Offerings and brands
• Companies address needs by putting forth a
value proposition or a set of benefits offered
to customers to satisfy their needs. The value
proposition is made tangible by the offering.
Nokia “Connecting People”
BMW “ The Ultimate Driving Machine
Apple “ Touching is believing”
• A brand is an offering from a known source.
All companies strive to build a strong,
favorable and unique brand image
PEPSI POSITIONING
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1939–1950: "Twice as Much for a Nickel
1950: "More Bounce to the Ounce“
1950–1957: "Any Weather is Pepsi Weather“
1957–1958: "Say Pepsi, Please“
1958–1961: "Be Sociable, Have a Pepsi"
1961-1963: "Now It's Pepsi for Those Who
Think Young"
• 1963–1967: "Come Alive, You're in the Pepsi
• Generation" (jingle sung by Joanie Sommers)
• 1967–1969: "(Taste that beats the others
cold) Pepsi Pours It On".
• 1969–1975: "You've Got a Lot to Live, and
Pepsi's Got a Lot to Give"
• 1975–1977: "Have a Pepsi Day“
• 1977–1980: "Join the Pepsi People (Feeling
Free)"
• 1983: "It's cheaper than Coke!"
• 1983–1984: "Pepsi Now! Take the Challenge!“
• 1984–1991: "Pepsi. The Choice of a New
Generation" (commercial with Michael
Jackson and The Jacksons, featuring Pepsi
version of Billie Jean)
• 1984-1988: "Diet Pepsi. The Choice of a New
Generation"
• 1988-1989: "Diet Pepsi. The Taste That's
Generations Ahead"
• 1989-1990: "Diet Pepsi. The Right One"
• 1989-1992: "Diet Pepsi. The Taste That Beats
Diet Coke"
• 1986–1987: "We've Got The Taste"
(commercial with Tina Turner)
• 1987–1990: "Pepsi's Cool" (commercial with
Michael Jackson, featuring Pepsi version of
Bad)
• 1990–1991: "You got the right one Baby UH
HUH" (sung by Ray Charles for Diet Pepsi)
• 1990–1991: "Yehi hai right choice Baby UH
HUH" (Hindi - meaning "This is the right choice
Baby UH HUH") (India)
• 1991–1992: "Gotta Have It"/"Chill Out"
• 1992–1993: "Be Young, Have Fun, Drink Pepsi“
• 1993–1994: "Right Now" Van Halen song for the
Crystal Pepsi advertisement.
• 1994–1995: "Double Dutch Bus" (Pepsi song sung by
Brad Bentz) 1995: "Nothing Else is a Pepsi"
• 1995–1996: "Drink Pepsi. Get Stuff." Pepsi Stuff
campaign
• 1996–1997: "Pepsi: There's nothing official about it"
(During the Wills World Cup (cricket) held in
India/Pakistan/Sri Lanka)
• 1997–1998: "Generation Next" - with the
Spice Girls.
• 1998–1999: "It's the cola" (100th anniversary
commercial) 1999–2000: "For Those Who
Think Young"/"The Joy of Pepsi-Cola"
(commercial with Britney Spears/commercial
with Mary J. Blige)
• 1999-2006: "Yeh dil maange more" (Hindi meaning "This heart asks for more") (India)
• 2003: "It's the Cola"/"Dare for More" (Pepsi
Commercial)
• 2006–2007: "Why You Doggin' Me"/"Taste the
one that's forever young" Commercial
featuring Mary J. Blige
• 2007–2008: "More Happy"/"Taste the once
that's forever young" (Michael Alexander)
• 2008: "Pepsi Stuff" Super Bowl Commercial
(Justin Timberlake)
• 2008: "Рepsi is #1" Тv commercial (Luke Rosin)
• 2008–present: "Something for Everyone."
2009–present: "Refresh Everything"/"Every
Generation Refreshes The World"
• 2009–present: "Yeh hai youngistaan meri
jaan" (Hindi - meaning "This is our young
country my baby") (India)
• 2009–present: "My Pepsi My Way"(India)
• 2009–present: "Refresca tu Mundo" (Spanish meaning "Refresh your world") (Spanish
Spoken countries in Latin America)
• 2010: "Every Pepsi refreshes the world."
• 2011–present: ”Summer Time is Pepsi
Time” 2011–present: ”Born in the
Carolinas”
• 2012: ”Where there’s Pepsi, there’s
music” – used for the 2012 Super Bowl
commercial 2012: ”Live For Now”
2012: ”Change The Game”
• 2012: “The Best Drink Created
Worldwide”
• 2013 : “Oh yes abhi !”
Value
• Value reflects the sum of the perceived
tangibles and intangible benefits and costs to
customers.
• Value is primarily a combination of :
Quality, service and price – “The customer
value triad”
Value
Marketing is the identification, creation,
communication, delivery and monitoring of
customer value
Satisfaction
• A person’s judgement of a product’s perceived
performance ( or outcome) in relation to
expectations.
Marketing channels
• Communication channels
( newspapers, magazines, radio, TV, billboards,
posters, fliers, internet, emails,blogs)
• Distribution channels ( distributors,
wholesalers, retailers, agents)
• Service channels ( warehouse, transporters,
banks , insurance companies)
Supply Chain
• The supply chain stretches from raw materials
to components to final products carried to
final buyers.
• Each company captures only a certain
percentage of the total value generated by the
supply’s chain’s value delivery system.
• Every expansion of a company upstream or
downstream is an attempt to capture a higher
percentage of supply chain value
A simple supply chain
Competition
• All actual and potential rival offerings and
substitutes a buyer might consider.
• Eg an automobile company planning to buy
steel for its cars. Can buy steel from SAIL, or
Tata Steel or import from abroad or substitute
other parts for steel. Hence Tata Steel should
think of all these possibilities as competition
not only integrated steel companies
Marketing Environment
• Task Environment includes all the actors
engaged in producing, distributing and
promoting the offering.
• Broad environment : Demographic, Economic,
Physical, Technological, Political – Legal, Social
– Cultural.
The savvy marketer is constantly scanning
these environments for trends and adjusting
his marketing strategy accordingly
The marketplace isn’t what it used to be…
Changing technology
Globalization
Deregulation
Privatization
Empowerment
Customization
Convergence
Disintermediation
1-74
New Consumer Capabilities
• A substantial increase in buying power
• A greater variety of available goods and services
• A great amount of information about practically
anything
• Greater ease in interacting and placing and
receiving orders
• An ability to compare notes on products and
services
• An amplified voice to influence public opinion.
Stephen Ginns
New company capabilities
• Internet to augment their reach
• Fuller information and data gathering
• Faster internal communication through
intranet
• Faster external communication among
customers by creating on line and off line
buzz through brand advocates and user
communities
• Target marketing and two way communication
• Marketers can send ads, coupons, samples
and information to customers who have
requested this.
• Mobile marketing
• Customized goods
• Corporate blogging to communicate with the
public, customers and employees
• Price comparisons before purchase
• Online recruitment, training etc.
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production
concept
Product
concept
Copyright ©2014 by Pearson Education, Inc. All rights reserved
Selling
concept
Marketing
concept
Societal
concept
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Production concept:
Consumers will favor products that are
available and highly affordable
Copyright ©2014 by Pearson Education, Inc. All rights reserved
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Product concept:
Consumers favor products that offer
the most quality, performance, and
features
Focus is on continuous product
improvements
Copyright ©2014 by Pearson Education, Inc. All rights reserved
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Selling concept:
Consumers will not buy enough of the
firm’s products unless it undertakes a
large scale selling and promotion effort
Copyright ©2014 by Pearson Education, Inc. All rights reserved
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Marketing concept: Knowing
the needs and wants of the
target markets and
delivering the desired
satisfactions better than
competitors do
Copyright ©2014 by Pearson Education, Inc. All rights reserved
Designing a Customer-Driven
Marketing Strategy
Marketing Management Orientations
Societal marketing:
Make good marketing
decisions by considering:
consumers’ wants and
long-term interests,
company’s requirements,
society’s long-run interests
Copyright ©2014 by Pearson Education, Inc. All rights reserved
• Production concept : Oldest concept. The
Philosophy : Consumers will prefer products
that are widely available and inexpensive High
production efficiencies, low costs and mass
distribution are required.
Still in use: Lenovo (PCs) and Haier ( Domestic
appliances) in China where labour is plentiful
and cheap. Also used when a company wants
to extend its market.
Product Concept : Philosophy : Consumers favour
products that offer the most quality, performance or
innovative features. The focus is on making better
and better products and improving them over time. “
The better mouse trap” syndrome. ( Forgets that
proper, pricing, distribution advertising and selling are
required to make it successful)
The Selling concept : Philosophy: Consumers and
businesses if left alone won’t buy enough. Aggressive
selling and promotion is required
Used for unsought goods such as insurance,
encyclopedias etc. Also, when there is over – capacity.
( Forgets that customers who have been bullied into
buying can return and bad mouth it and complain to
consumer organizations).
• The Marketing concept .Philosophy: A customer –
centred philosophy. Find the right products for your
customers.
• Selling focuses on the needs of the seller; marketing
on the needs of the buyer.
• The Marketing concept holds that the key to
achieving organizational goals is being more effective
than competitors in creating, delivering and
communicating superior customer value to your
chosen target markets.
The Holistic Marketing Concept goes beyond
the Marketing concept. It is a more complete
and cohesive approach which recognizes
that “everything matters” in marketing. It
attempts to recognize and reconcile the scope
and complexities of marketing activities.
Holistic Marketing Concept
• Definition – development, design and
implementation of marketing programs,
processes and activities that recognizes the
breadth and interdependencies of their efforts.
1-88
Internal Marketing
• Ensures that everyone in the organization embraces
marketing principles, especially senior management.
• Internal marketing is the task of hiring, training and
motivating able employees who want to serve
customers well.
• Works on two levels : across the marketing function
and across all departments who must all “think
customer”.
Integrated Marketing
• The marketer’s task is to devise marketing
activities and assemble fully integrated
marketing programmes to create,
communicate and deliver value for
consumers.
Relationship Marketing
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Aims to build mutually satisfying long – term
relationships with 4 key constituents in order to earn
and retain their business.
Customers
Employees
Marketing partners ( Channels, suppliers,
distributors, dealers, agencies
Financial community ( Shareholders, investors,
analysts)
Relationship marketing creates a marketing network.
Based on the philosophy : Build an effective network
of relationships with key stakeholders, profit will
follow
Performance Marketing
The returns to the business from marketing
activities and programmes, as well as
addressing broader concerns and their legal,
ethical, social and environmental effects.
• Financial accountability as well as Social
responsibility marketing
The Societal Marketing Concept
• The Societal marketing concept calls upon marketers
to build social and ethical considerations into their
marketing practices.
• The Societal Marketing concept holds that the
organization’s task is to determine the needs, wants
and interests of target markets and to deliver the
desire satisfactions more effectively and efficiently
than competitors in away that preserves or enhances
the consumer’s and society’s long tem well – being.
Figure 1.4 The Four P’s
1-95
Marketing Mix and the Customer
Four Ps
• Product
• Price
• Place
• Promotion
Four Cs
• Customer solution
• Customer cost
• Convenience
• Communication
1-96
Four As
Jagdeesh Sheth :
•
•
•
•
Acceptability
Affordability
Accessibility
Awareness
4 Ps updated : Kotler
• People
• Processes
• Programmes
• Perfomance
Another view !!!
• We need to throw away the Four Ps and
embrace the Four Es:
• from Product to Experience
from Place to Everyplace
from Price to Exchange
from Promotion to Evangelism
Marketing Myopia
The words were first coined by Theodore Levitt in 1960.
In his definition (Levitt 1960:46), Marketing Myopia
"defines an industry, or a product, or a cluster of knowhow so narrowly as to guarantee its premature
senescence.
• When we mention 'railroads', we should
make sure we mean 'transportation'". The
point he wants to make here is to define a
company's mission and products in terms
of more basic customer needs. That will
ensure the company to survive profitably
in the long run, whatever is the
performance of any product/ product
range.
Marketing Myopia is a "Short sighted and inward
looking approach to marketing that focuses on the
needs of the firm instead of defining the firm and its
products in terms of the customers' needs and
wants... they omit to ask the vital question, "What
business are we in?""
• Another cause of marketing myopia is what
Levitt calls the "idea of indispensability." This
concept is embodied by the petroleum industry.
Levitt says that, "the petroleum industry is pretty
much persuaded that there is no competitive
substitute" for its products, and that all energy
providers will ultimately use a derivative of crude
oil, whether in the form of gasoline, diesel, or
kerosene.
•
• Yet another cause pinpointed by Levitt in
"Marketing Myopia" is what he calls
"production pressures." It is very
heartening for a company to know that it
has the "capability to produce more
products at ever-decreasing costs and sell
them for ever-rising profits." However,
when this occurs, "all effort focuses on
production and the result is that marketing
gets neglected.“
Another problem may occur with increased
thrust on research and development,
particularly in case of highly technical
products. This overemphasizes the
creation of products and overshadows
customer
Some other examples of
Marketing Myopia
• Companies that thought they were in the
horse-drawn carriage business but were
really in transportation were wiped out by
automobiles.
• Companies that thought they were in the
ice supply business but were really in food
and drink storage were eliminated by
refrigerators.
• Companies that made slide rules failed to
realise they were in the technical
calculation business and were made
obsolete by graphics calculators.
• Companies that thought they were in the
CD business but were really in music were
replaced by digital downloads.
• Companies that thought they were in the
typewriter business but were really in
communications were put out of business
by the word processor.
Marketing Management Tasks
• Develop market strategies and plans
• Assessing Market Opportunities and Customer
Value
• Choosing Value
• Designing value
• Delivering value
• Communicating value
• Sustaining growth and value
1-108
So, What Is Marketing?
Pulling It All Together
Copyright ©2014 by Pearson Education, Inc. All rights reserved