Fundamentals of Marketing Management

Presentation Objectives
Why is marketing important? What is the scope of marketing? What are some fundamental marketing concepts? How has marketing management changed? What are the tasks necessary for successful marketing management?

Good Marketing is No Accident

Good Marketing is No Accident

The roaring success of four-wheeler Tata Ace, in a market earlier dominated by three-wheeler load carriers, was due to a deep understanding of the market needs and customer requirements.

Marketing An Introduction
An Ancient Art, an Universal Entity, a Vital Function of Business Business = Marketing Business has just two basic functions: marketing and innovation. Peter Drucker Entrepreneurial part of business Marketing is the logic of business. - Peter Drucker Strategic part of business Represents the real strategic activity in a business and the real strategic function of management.

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 relationships in ways that benefit the organization and its stakeholders.

Understand Marketing by Checking What does it do Meeting Human/Customer Needs

Marketing must know Who are our customers? What are their needs? What must we do to meet their needs?

Meeting latent and future needs Marketing searches/spots/visualises the latent and future needs of customers.

Meeting needs at a profit Marketing meets customer needs at a profit.

Understand Marketing by Checking What does it do

Being Empathetic to Customers

Generating customer satisfaction Product/Service Ambience associated with product/service Speed of response Measuring customer satisfaction Satisfaction generated may fall short of or match or exceed the expectations of customers. Is it then correct to assume Marketing = Customers?

Understand Marketing by Checking What does it do

What Else is Embedded in Marketing? Demand Generating the demand Meeting the demand Competition Understand objectives and strategies of competitors. Anticipate actions and reaction patterns of competitors. What is marketed? Customers buy benefits/services/solutions, not products. Customers seek Value in benefits/services/solutions. (Example: Channa/Channa-Batura/TCS Certainty)

Understand Marketing by Checking What does it do

What is Meant by Market? People/consumers with purchasing power Demand Marketing as a Process Is a process of exchange Means offering something and getting something in return Involves a buyer and a seller. The transaction takes place as per agreed upon conditions The transaction succeeds when both parties are satisfied. Marketing, a Dynamic and Complex Idea Increased levels of competition More sophisticated consumer.

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.

MARKETING CONCEPTS
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)

MARKETING CONCEPTS
The SELLING CONCEPT holds that consumers and businesses, will ordinarily not buy enough of the organizations 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)

MARKETING CONCEPTS
The SOCIETAL MARKETING concept holds that the organizations 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 societys well-being.

Selling is only the tip of the iceberg

There will always be a 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

Difference Between Selling and Marketing Selling revolves around the needs and interests of the seller. The purpose of selling is to sell what is made rather than make what the customer wants. Views business as a task of somehow disposing off existing products. Marketing revolves around the needs and interests of the buyer Marketing starts with the customers. Views business as a task of meeting the needs of the customers.

Contd.

What is Marketed?
Goods Services Events & Experiences Persons Places Information Ideas

Figure 1 A Simple Marketing System

Figure 2 Structure of Flows in a Modern Exchange Economy

Key Customer Markets

Consumer Markets Global Markets

Business Markets

Nonprofit/ Government Markets

Core Marketing Concepts

Needs, wants, and demands Segmentation Target markets, Positioning, Offerings and brands Value and satisfaction Marketing channels Supply chain Competition Marketing environment

New Marketing Realities

Information technology Globalization Deregulation Privatization Competition Consumer resistance Retail transformation

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

Figure 3 Holistic Marketing Dimensions

Internal Marketing
Internal marketing is the task of hiring, training, and motivating employees who want to serve customers well.

Integrated Marketing
4 Ps of Marketing

Performance Marketing
Financial Accountability Social Responsibility Marketing

Relationship Marketing
It aims to build mutually long term relationships with key constituents in order to earn and retain their business

Developing Marketing Strategies and Plans

Objectives
How does marketing affect customer value? How is strategic planning carried out at different levels of the organization? What does a marketing plan include?

Nike Creates Value

Three Vs Approach to Marketing

Define the value segment

Define the value proposition

Define the value network

What is the Value Chain?

The value chain is a tool for identifying ways to create more customer value because every firm is a synthesis of primary and support activities performed to design, produce, market, deliver, and support its product.

Core Business Processes

Market-sensing process New-offering realization process Customer acquisition process Customer relationship management process Fulfillment management process

Characteristics of Core Competencies

A source of competitive advantage Difficult to imitate

What is Holistic Marketing?

Holistic marketing sees itself as integrating the value exploration, value creation, and value delivery activities with the purpose of building long-term, mutually satisfying relationships and coprosperity among key stakeholders.

Value Exploration
How can a company identify new value opportunities

Value Creation
How can a company efficiently create more promising new value offerings

Value Delivery
How can a company use its capabilities and infrastructure to deliver the new value offerings more efficiently

Intels New Brand Identity: Leap Ahead

What is a Marketing Plan?

A marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at strategic and tactical level. a

Levels of a Marketing Plan

Strategic
Target marketing decisions Value proposition Analysis of marketing opportunities

Tactical
Product features Promotion Merchandising Pricing Sales channels Service

The Strategic Planning, Implementation, and Control Processes

Corporate Headquarters Planning Activities Define the corporate mission Establish strategic business units (SBUs) Assign resources to each SBU Assess growth opportunities

Good Mission Statements

Focus on limited number of goals Stress major policies and values

Define major competitive spheres

Take a long-term view Short, memorable, meaningful

Infosys Technologies Limited

To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors, and society at large.

Biocon

To be an integrated biotechnology enterprise of global distinction.

eBay

We help people trade anything on earth. We will continue to enhance the online trading experiences of allcollectors, dealers, small businesses, unique item seekers, bargain hunters, opportunity sellers, and browsers.

Product Orientation vs. Market Orientation Company

Xerox
Columbia Pictures Encyclopedia Britannica Carrier

Product
We make copying equipment
We make movies We sell encyclopedias We make air conditioners

Market
We improve office productivity
We entertain people We distribute information We provide climate control inside homes

SBUs
An SBU is separately identifiable business; have a distinct mission, have its own executive team with profit responsibility

Characteristics of SBUs
It is a single business or collection of related businesses It has its own set of competitors It has a leader responsible for strategic planning and profitability

Assigning Resources to SBUs

Analyzing Current SBUs :

Boston Consulting Group Approach

Relative Market Share
High

Market Growth Rate

Stars High High growth & share Profit potential May need heavy investment to grow

Low Question Marks High growth, low share Build into Stars/ phase out Requires cash to hold market share Dogs

Cash Cows
Low

Low growth, high share Low growth & share Established, successful Low profit potential SBUs Produces cash

Assessing growth opportunities

The Strategic Planning Gap

Intensive Growth
Identify the opportunities to achieve further growth within current business

Strategies Suggested by Ansoffs Product-Market Expansion Grid Market penetration Market development Product development Diversification

Strategies Suggested by Ansoffs Product-Market Expansion Grid

Current Products New Products 3. Productdevelopment Strategy

Current Markets

1. MarketPenetration Strategy

New Markets

2. MarketDevelopment Strategy

(Diversification Strategy)

Integrative Growth
Identify the opportunities to build or acquire businesses that are related to current business

Diversification Growth
Identify the opportunities to add attractive business unrelated to current business

The Business Unit Strategic Planning Process

SWOT Analysis
Strengths Weaknesses Opportunities Threats

Goal Formulation
Goals should be quantitative Goals should be realistic Objectives must be consistent

Goal Setting
S- Specific M- Measurable A- Action Oriented R- Realistic T- Time Bound

Strategic Formulation: Porters Generic Strategies

Overall Cost Leadership

Differentiation
Focus

Marketing Plan
A marketing plan is the central instrument for directing and coordinating the marketing effort.

Marketing Plan Contents

Executive summary Table of contents Situation analysis Marketing strategy Financial projections Implementation controls

Marketing Environment

Marketing Environment
All the actors and forces influencing the companys ability to transact business effectively with its target market. Includes:
Microenvironment - forces close to the company that affect its ability to serve its customers. Macroenvironment - larger societal forces that affect the whole microenvironment.

The Marketing Environment

Demographic

Cultural
Publics Suppliers

Economic Company
Competitors Customers

Political
Intermediaries

Natural

Technological

The Microenvironment
Company

Publics

Forces Affecting a Companys Ability to Serve Customers

Suppliers

Competitors

Intermediaries

Customers

The Companys Microenvironment

Companys Internal Environment- functional areas such as top management, finance, and manufacturing, etc. Suppliers - provide the resources needed to produce goods and services. Marketing Intermediaries - help the company to promote, sell, and distribute its goods to final buyers.

The Companys Microenvironment

Customers - five types of markets that purchase a companys goods and services. Competitors - those who serve a target market with similar products and services. Publics - any group that perceives itself having an interest in a companys ability to achieve its objectives.

Customer Markets

International Markets

Consumer Markets

Company
Government Markets Business Markets

Reseller Markets

The Macroenvironment
Demographic Cultural
Forces that Shape Opportunities and Pose Threats to a Company

Economic

Political Technological

Natural

The Companys Macroenvironment

Demographic - monitors population in terms of age, sex, race, occupation, location and other statistics. Economic - factors that affect consumer buying power and patterns. Natural - natural resources needed as inputs by marketers or that are affected by marketing activities.

Economic Environment

Economic Development

Key Economic Concerns for Marketers

Changes in Consumer Spending Patterns

Changes in Income

Natural Environment
More Government Intervention

Higher Pollution Levels

Factors Affecting the Natural Environment

Shortages of Raw Material

Increased Costs of Energy

The Companys Macroenvironment

Technological - forces that create new product and market opportunities. Political - laws, agencies and groups that influence or limit marketing actions. Cultural - forces that affect a societys basic values, perceptions, preferences, and behaviors.

Technological Environment
Accelerating Pace of Change High R & D Budgets

Issues in the Technological Environment

Unlimited Opportunities For Innovation

Political Environment

Increased Legislation

Key Trends in the Political Environment

Greater Concern for Ethics

Changing Administration

Cultural Environment
Of Oneself
Of the Universe Of Nature

Views That Express Values

Of Society

Of Others Of Organizations