Marketing Management

Defining Marketing for the 
Twenty­First Century
 The Chartered Institute of
Marketing

‘Marketing is the management

process that identifies, anticipates
and satisfies customer requirements
profitably’
 Adcock et al

The right product, in the right place, at

the right time, and at the right price’
 Kotler 1980

Marketing is the human activity

directed at satisfying human needs
and wants through an exchange
process’
 Kotler 1991

‘Marketing is a social and managerial

process by which individuals and
groups obtain what they want and
need through creating, offering and
exchanging products of value with
others’
 Objectives

 Understand the new economy.

 Learn the tasks of marketing.
 Become familiar with the major
concepts and tools of marketing.
 Understand the orientations
exhibited by companies.
 Objectives

 Learn how companies and marketers

are responding to new challenges.
 The New Economy

 Consumer benefits from the digital

revolution include:
– Increased buying power.
– Greater variety of goods and services.
– Increased information.
– Enhanced shopping convenience.
– Greater opportunities to compare product
information with others.
 The New Economy

 Firm benefits from the digital

revolution include:
– New promotional medium.
– Access to richer research data.
– Enhanced employee and customer
communication.
– Ability to customize promotions.
Challenges of Today’s Organization

Change

Govt. Bigness
Interference

Competition Organization Diversification

Information
Globalization

Science & Tech

What Can Be Marketed?

 Goods  Places
 Services  Properties
 Experiences  Organizations
 Events  Information
 Persons  Ideas
 Product
Goods
Places Services

Ideas Information
Product
Persons Experiences

Properties Organizations
Events
 Marketing Defined

 Kotler’s Social Definition:

“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.”
 Marketing Defined

 The AMA Managerial Definition:

“Marketing 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 objectives.”
Core Marketing Concepts

 Target markets and  Exchange and

market segmentation transactions
 Marketplace, market-  Relationship and
space, metamarkets networks
 Marketers & prospects  Marketing channels
 Needs, wants, demands  Supply chain
 Product offering and  Competition
brand  Marketing environment
 Value and satisfaction  Marketing program
 Core Marketing Concepts

 Target markets & segmentation

– Differences in needs, behavior,
demographics or psychographics are
used to identify segments.
– The segment served by the firm is
called the target market.
– The market offering is customized to
the needs of the target market.
 Core Marketing Concepts

 Needs describe basic human requirements

such as food, air, water, clothing, shelter,
recreation, education, and entertainment.
 Needs become wants when they are
directed to specific objects that might
satisfy the need. (Fast food)
 Demands are wants for specific products
backed by an ability to pay.
 Core Marketing Concepts
 A Product is any offering that can satisfy
a need or want, while a brand is a
specific offering from a known source.
 When offerings deliver value and
satisfaction to the buyer, they are
successful.
 Enhancing Value
 Marketers can enhance the value of an
offering to the customer by:
– Raising benefits.
– Reducing costs.
– Raising benefits while lowering costs.
– Raising benefits by more than the increase
in costs.
– Lowering benefits by less than the reduction
in costs.
Core Marketing Concepts
 Exchange involves obtaining a desired
product from someone by offering
something in return. Five conditions
must be satisfied for exchange to
occur.
 Transaction involves at least two
things of value, agreed-upon
conditions, a time of agreement, and a
place of agreement.
Core Marketing Concepts

 Relationship marketing aims to

build long-term mutually
satisfying relations with key
parties, which ultimately results in
marketing network between the
company and its supporting
stakeholders.
Core Marketing Concepts

Marketing  Deliver messages to

Channels and receive
messages from
target buyers.
 Communication
channels  Includes traditional
media, non-verbal
 Distribution
communication, and
channels store atmospherics.
 Service channels
Core Marketing Concepts

Marketing  Display or deliver

Channels the physical
products or
 Communication services to the
channels buyer / user.
 Distribution
channels
 Service channels
Core Marketing Concepts
 Carry out
Marketing
transactions with
Channels
potential buyers by
facilitating the
 Communication
transaction.
channels
 Distribution
channels
 Service channels
Core Marketing Concepts
 A supply chain stretches from raw
materials to components to final
products that are carried to final
buyers.
 Each company captures only a
certain percentage of the total value
generated by the supply chain.
 Marketing Mix
 The marketing program is developed to
achieve the company’s objectives.
Marketing mix decisions include:
– Product: provides customer solution.
– Price: represents the customer’s cost.
– Place: customer convenience is key.
– Promotion: communicates with customer.
 Marketing Mix

Mkt Mix

Product Price Placement Promotion

 Marketing Mix
 Product  Price  Promotion  Place
Product Variety
Quality List Price Sales Promotion Channels
Design
Discounts Advertising Coverage
Features
Brand Name Allowances Sales Force Assortments
Packaging Payment Period Public Relations Locations
Sizes
Publicity Inventory
Services
Warranties Transport
Returns
 Competing Marketing
Concepts
 The orientation or philosophy of the firm
typically guides marketing efforts.
Several competing orientations exist:
– Production concept
– Product concept
– Selling concept
– Marketing concept
– Societal marketing concept
 Competing Marketing
Concepts

Production Concept

Product Concept
Marketing
Marketing Concept
Concepts

Selling Concept Societal

Marketing
 The Marketing Concept
 Achieving organizational goals requires
that company be more effective than
competitors in creating, delivering, and
communicating customer value.
 Four pillars of the marketing concept:
– Target market
– Customer needs
– Integrated marketing
– Profitability
Changes in the Marketplace
 Globalization, technological advances,
and deregulation have created many
challenges:
– Customers
– Brand manufacturers
– Store-based retailers
 Both companies and marketers have
been forced to respond and adjust.
 Levels of Competition

 Four levels of competition can be

distinguished by the level of product
substitutability:
– Brand competition
– Industry competition
– Form competition
– Generic competition
 Levels of Competition
Brand

Industry Competition Form

Generic
Marketing Environment

 Task Environment
 Broad Environment
Organization’s Environment
Macro or Far Environment

Near or Operating
Economic
Technological Environment
Factors
Factors Partners
Customers

Clients ORGANIZATION

Suppliers
Political
Social Competitors Factors
Factors
 Task Environment
 Company
 Suppliers
 Distributors
 Dealers
 Target Customers
 Competitors
Broad Marketing Environment

 The following forces in the Broad

Environment have a major impact on the
Task Environment:
– Demographics
– Economics
– Natural environment
– Technological environment
– Political-legal environment
– Social-cultural environment
Demographic Environment

 Population Age Mix

 Population Growth
 Ethnic Group
 Education Status
 Household Patterns
 Economic Environment

 Income Distribution
Subsistence Economies
Raw Material Exporting Economies
Industrializing Economies
Industrialized Economies
 Savings, Debt and Credit Availability
 Natural Environment

 Shortage of Raw Materials

 Increased Energy Costs
 Increased Pollution Levels
 Changing Role of Government
Technological Environment

 Accelerating Technological Change

 Innovation Opportunities
 Varying R&D Budgets
 Regulations of Technological
Change
Political-Legal Environment

 Legislation Regulating Business

 Growth of Special Interest Groups
Social-Cultural Environment

 Beliefs
 Values
 Norms
 Subculture
 SWOT Analysis

 Strengths (Internal)
 Weaknesses (Internal)
 Opportunities (External)
 Threats (External)
SWOT
SWOT Analysis
Analysis
Contents of the Marketing
Plan
– Executive Summary
– Current Marketing Situation
– Opportunity and issue analysis
– Objectives
– Marketing strategy
– Action programs
– Financial projections
– Implementation controls
 Marketing Strategy
Segmentation

Positioning

Product Management
Pricing

Distribution

Marketing Communications
Marketing Research
 Market Segmentation

 Market Segment
It consist of a large identifiable group
within a market with similar wants
purchasing power, geographical
location and buying attitudes or
habits
 Levels of Segmentation

 Niche Marketing
 Local Marketing
 Individual Marketing
 Patterns of Market
Segmentation

 Homogeneous Preferences
 Diffused Preferences
 Clustered Preferences
 Market Segmentation
Procedure

 Survey Stage
 Analysis Stage
 Profiling Stage
Bases for Segmenting Market

 Geographic
 Demographic
 Psychographics
 Behavioral
Characteristics of Effective
Segmentation

 Measurable
 Substantial
 Accessible
 Differentiable
 Actionable
 Product Positioning

It is the act of designing the

company’s offering and image to
occupy a distinctive place in the
target market
Major Positioning Errors

 Under positioning
 Over positioning
 Confused positioning
 Doubtful positioning
 Differentiation

It is the act of designing a set of

meaningful differences to
distinguish the company’s
offering from competitor’s
offerings
 Dimensions/Basis of
Differentiation
 Product
 Services
 Personnel
 Channel
 Image
Basis of Differentiation

Product
Image

Service
Channel

Personnel
Product Differentiation
 Form
 Features
 Performance
 Conformance
 Durability
 Reliability
 Repair ability
 Style & Design
 Product Differentiation
Form Features

Performance Product Conformance

Style &
Reliability
Design

4-103
Service Differentiation

 Ordering Ease
 Delivery
 Installation
 Customer Training
 Customer Consulting
 Maintenance and Repair
 Miscellaneous
 Service Differentiation
Ordering
Delivery
Ease

Customer Customer
Training Service Consultation

Warrantee/
Miscellaneous
Guarantee

4-103
Personnel Differentiation

 Competence
 Courtesy
 Credibility
 Reliability
 Responsiveness
 Communication
 Personnel Differentiation
Personnel Differentiation
Competence Courtesy

Credibility Personnel Reliability

Responsiveness Communication

4-103
Channel Differentiation

 Coverage
 Expertise
 Performance
Channel Differentiation

Channel

Coverage Expertise Performance

 Image Differentiation

 Symbols
 Media
 Atmosphere
 Events
 Image Differentiation

Image

Symbols Media Atmosphere Events

 Criteria for Worthful
Differentiation
 Important
 Distinctive
 Superior
 Communicable
 Pre-emptive
 Affordable
 Profitable
 Product

A product is anything that can be

offered to a market to satisfy a want
or need. It include goods, services,
experiences, events, persons,
places, properties, organizations,
information and Ideas.
 Product Life Cycle

 Introduction
 Growth
 Maturity
 Decline
 Product Levels

 Core Benefit
 Basic Product
 Expected Product
 Augmented Product
 Potential Product
 Product Hierarchy

 Need Family
 Product Family
 Product Class
 Product Line
 Product Type
 Brand Name
 Item
Product Classifications

 Durability and Tangibility

 Consumer Goods
 Industrial Goods
Durability and Tangibility

 Non-durable goods
 Durable goods
 Services
 Consumer Goods
Classification
 Convenience goods
 Shopping goods
 Specialty goods
 Unsought goods
 Industrial Goods
Classification
 Materials and Parts
 Capital Items
 Supplies and Business Services
 Product Mix

It is the set of all products and items

that a particular seller offers for sale.
A product mix has its
Width
Length
Depth
Consistency
Product Line Decisions

 Line Stretching
Down-market Stretching
Up-market Stretching
Two-Way Stretching
 Line Filling
 Line Modernization
 Line Featuring & Line Pruning
 Branding

 Brand
It is a name, term, sign, symbol,
design, or a combination of
them, intended to identify the
goods or services of one seller
and to differentiate them from
competitors
Meanings Conveyed by
Brand
 Attributes
 Benefits
 Values
 Culture
 Personality
 User
Advantages of Branding

 Easy Selling
 Legal Protection
 Customer Loyalty
 Easy Market Segmentation
 Image Building
Brand Sponsor Decision

 Manufacturer Brand
 Distributor Brand
 Licensed Brand
 Brand Name Decision

 Individual Name
 Blanket Family Name
 Separate Family Names for all
products
 Company Trade Name combined
with Individual Product Names
Brand Strategy Decision

 Line Extension
 Brand Extension
 Multi-brands
 New Brand
 Co-brands
 Packaging

It includes the activities of

designing and producing the
container for a product
 Levels of Packaging

 Primary
 Secondary
 Shipping
Advantages of Packaging

 Self Service
 Consumer Affluence
 Company and brand image
 Innovation Opportunity
 Labeling

It may be a simple tag attached

to the product or an elaborately
designed graphic that is part of
the package
 Functions of Label

 Identification
 Grading
 Description
 Promotion
 Service

It is any act or performance that

one party can offer to another
that is essentially intangible and
does not result in the ownership
of anything. Its production may
or may not be tied to a physical
product.
Categories of Service Mix

 Pure Tangible Good

 Tangible Good with Accompanying
Service
 Hybrid
 Major Service with Accompanying
Minor Goods
 Pure Service
Characteristics of Services

 Intangibility
 Inseparability
 Variability
 Perishability
Elements/Tools of Service
Marketing Approach
 Product
 Price
 Promotion
 Placement
 People
 Physical Evidence
 Process
Marketing Strategy for Service
Firms

 External Marketing
 Internal Marketing
 Interactive Marketing
Tasks of Service Companies

 Managing Differentiation
Offer
Delivery
Image
 Service Quality
 Productivity
 Determinants of Quality

 Reliability
 Responsiveness
 Assurance
 Empathy
 Tangibles
Common Features of Excellent
Service Companies
 Strategic Concept
 Top Management Commitment
 High Standards
 Monitoring Systems
 Satisfying Customer Complaints
 Employees Satisfaction
 Designing The Pricing
Strategies

 Pricing Objectives
 Pricing Method
 Promotional Pricing
 Discriminatory Pricing
 Product Mix Pricing
Setting Pricing Objective

 Survival
 Maximum Current Profit
 Maximum Market Share
 Maximum Market Skimming
 Product Quality Leadership
Selecting a Pricing Method

 Markup Pricing
 Target Return Pricing
 Perceived Value Pricing
 Value Pricing
 Going-rate Pricing
 Sealed Bid Pricing
 Psychological Pricing
 Price Discounts and
Allowances

 Cash Discounts
 Quantity Discounts
 Functional/Trade Discounts
 Seasonal Discounts
 Allowances
 Promotional Pricing

 Loss-Leader Pricing
 Special Event Pricing
 Cash Rebates
 Low Interest Financing
 Longer Payment Terms
 Warranties and Service Contracts
 Psychological Discounting
 Discriminatory Pricing

 Customer-Segment Pricing
 Product-form Pricing
 Image Pricing
 Location Pricing
 Time Pricing
 Product Mix Pricing

 Product Line Pricing

 Optional Feature Pricing
 Captive Product Pricing
 Two Part Pricing
 By Product Pricing
 Product Bundling Pricing
Initiating and Responding to
Price Changes

 Initiating Price Cuts

 Initiating Price Increases
 Customer Reaction
Responding to Price Change

 Maintain Price
 Maintain Price and add Value
 Reduce Price
 Increase Price and Improve Quality
 Increase Price
 Launch a Low Price Item
 Developing Effective
Communication
 Identify the Target Audience
 Determine the Communication Objective
 Design the Message
 Select the Communication Channel
 Allocate Communication Budget
 Decide Communication Mix
 Measuring the Results
Marketing Communication Mix

 Advertising
 Sales Promotion
 Public Relations
 Personal Selling
 Direct Marketing
Promotional Objectives
 Awareness
 Knowledge
 Liking
 Preference
 Conviction
 Purchase
 Designing The Message

 Message Content
 Message Structure
 Message Format
 Message Source
 Message Content

 Rational Appeals
 Emotional Appeals
 Moral Appeals
 Methods of Establishing
Communication Budget

 Affordable Method
 Percentage of Sales Method
 Competitive-Parity Method
 Objective and Task Method
 Advertising

Any paid form of non-personal

presentation and promotion of ideas,
goods or services by and identified
sponsor
 Characteristics of
Advertising
 Public Presentation
 Pervasiveness
 Amplified Expressiveness
 Impersonality
 Advertising Objectives

 Informative Advertising
 Persuasive Advertising
 Reminder Advertising
Decision on Advertising Media

 Reach
 Frequency
 Impact
 Sales Promotion

A variety of short-term incentives to

encourage trail or purchase of a
product or service
 Characteristics of Sales
Promotion
 Communication
 Incentive
 Invitation
 Sales Promotion Tools
 Samples
 Coupons
 Cash Rebates
 Price Packs
 Premiums or Gifts
 Prizes
 Patronage Awards
 Sales Promotion Tools

 Free Trials
 Product Warranties
 Tie-in Promotions
 Cross Promotions
 Public Relations and
Publicity
A variety of programs designed to
promote or protect a company’s
image or its individual products
 Characteristics of Public
Relations and Publicity
 High Credibility
 Ability to catch buyers off guard
 Dramatization
Functions of PR Department

 Press Relations
 Product Publicity
 Corporate Communication
 Lobbying
 Counseling
Major Tools in Marketing PR

 Publications
 Events
 News
 Speeches
 Public Service Activities
 Identity Media
Objectives of Marketing PR

 Build Awareness
 Build Credibility
 Stimulate the Sales Force and
Dealers
 Hold Down Promotion Costs
 Personal Selling

Face to face interaction with one or

more prospective purchasers for the
purpose of making presentations,
answering questions and procuring
orders
Characteristics of Personal
Selling
 Personal Confrontation
 Cultivation
 Response
 Tasks of Sales Force

 Prospecting
 Targeting
 Communicating
 Selling
 Servicing
 Information Gathering
 Allocating
 Sales Force Structure

 Territorial
 Product
 Market
 Complex
 Principles of Personal
Selling
 Professionalism
 Negotiation
 Relationship Marketing
 Direct Marketing

It is an interactive marketing system

that uses one or more advertising
media to effect a measurable
response or transaction at any time.
Characteristics of Direct
Marketing
 Nonpublic
 Customized
 Up-to-date
 Interactive
Benefits of Direct Marketing

 Time Saving
 Easy Access to Information
 Ordering Ease
 Better Relationships
 Less Cost
Tools of Direct Marketing

 Mail
 Telephone
 Fax
 E-mail
 Internet
 Catalog Marketing
 Telemarketing
Placement-Value Delivery
Network
The network made up of the
company, suppliers, distributors
and ultimately customers who
partner with each other to improve
the performance of the entire
system
 Marketing Channels

A set of independent organizations

involved in the process of making a
product or service available for use
or consumption by the consumer or
business user
 Functions of Marketing
Channels
 Information
 Promotion
 Contact
 Matching
 Negotiation
 Physical Distribution
 Functions of Marketing
Channels
 Financing
 Risk Taking
 Channel Level

A layer of intermediaries that

performs some work in bringing the
product and its ownerships closer
to the final buyer
 Level of Channels

 Direct Marketing Channels

 Indirect Marketing Channels

Direct Marketing Channel

A marketing channel that has no

intermediary levels, the company
sells directly to consumers
Indirect Marketing Channel

A channel containing one or more

intermediary levels is called indirect
marketing channel
 Types of Marketing
Channels
 Conventional Distribution Channel
 Vertical Marketing System
 Horizontal Marketing System
 Multi-channel or Hybrid
Distribution System
 Conventional Marketing
System

A channel consisting of one or more

independent producers, wholesalers
and retailers, each a separate
business seeking to maximize its
own profits even at the expense of
profits for the system as a whole
Vertical Marketing System

A distribution channel structure in

which producers, wholesalers and
retailers act as a unified system.
One channel member owns the
others, has contracts with them or
has so much power that they all
cooperate.
 Types of VMS

 Corporate VMS

 Contractual VMS

 Administered VMS
 Corporate VMS

A VMS that combines successive

stages of production and
distribution under single ownership-
channel leadership is established
through common ownership
 Contractual VMS

A VMS in which independent firms at

different levels of production and
distribution join together through
contracts to obtain more economies
or sales impact than they could
achieve alone
 Administered VMS

A VMS that coordinates successive

stages of production and
distribution not through common
ownership or contractual ties but
through the size and power of one of
the parties.
 Horizontal Marketing
System
A channel arrangement in which two
or more companies at one level join
together to follow a new marketing
opportunity
 Multi-channel or Hybrid
Distribution System
A distribution system in which a
single firm sets up two or more
marketing channels to reach one or
more customer segments
Marketing Intermediaries
Strategies
 Intensive Distribution
 Exclusive Distribution
 Selective Distribution
Major Logistics Functions

 Warehousing
 Inventory Management
 Transportation
 Logistic Information Management
 Marketing Information
Systems
 Marketing Research
What is Marketing Research?
Process
Terminology
Techniques

 MKIS - Marketing Information Systems

Whatis MKIS
Components of an electronic MKIS
 Marketing Research

‘The systematic gathering, recording

and analysing of data about
problems relating to the marketing
of goods and services’

American Marketing Association

 The Marketing Research
Process
 Set objectives
 Define research Problem
 Assess the value of the research
 Construct a research proposal
 Specify data collection method
 Specify techniques of measurement
 Select the sample
 The Marketing Research
Process
 Data collection
 Analysis of results
 Present in a final report
Terminology of Marketing
Research
 Primary data - collected firsthand
 Secondary data - already exists, desk
research
 Quantitative research - statistical basis
 Qualitative research - subjective and
personal
 sampling - studying part of a
‘population’ to learn about the whole
 Marketing Research
Techniques
 Interviews
face-to-face
telephone
postal questionnaire
 Attitude measurement
cognitive component (know/believe about an
act/object)
affective component (feel about an act/object)
co native component (behave towards an
object or act)
 Marketing Research
Techniques
 Group discussion and focus group
 Postal research questionnaires
 Diary panels - sources of continuous
data
 In-home scanning - hand-held light pen
to scan barcodes
 Telephone research
 Observation
 What is MKIS?

‘MKIS (MIS) is a set of procedures

and methods for the regular, planned
collection, analysis and presentation
of information for use in marketing
decisions’

American Marketing Association

 The Components of a
Computerised MKIS

Data Bank

Statistical Display Marketing

MKIS
Bank unit Manager

Model
Bank
 The Components of a
Computerised MKIS
 Data bank - raw data e.g historical sales
data, secondary data
 Statistical bank - programmes to carry-
out sales forecasts, spending
projections
 A model bank - stores marketing models
e.g Inventory Model, Boston Matrix
 Display unit - VDU and keyboard