Marketing Management

MMM/MFM/MIM
Sem II

Prof. Ulhas Karkhanis

ulhas.karkhanis@ies.edu
Mobile no. +91 9324451564

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 Syllabus
• Introduction to marketing concepts, its relevance in India, marketing
mix, structures and systems
• Environment scanning and market opportunity analysis
• Buyer behavior – household, and industrial / organizational
• Market segment and segmental analysis
• Market estimation – Market potential, demand forecasting, and
sales forecasting
• Marketing information systems
• Marketing research
• Market planning
• Product mix decisions – product identification, product lifecycle,
branding and packaging**

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 Syllabus(cont.)
• New product development and management
• Pricing policies, structures and methods
• Concept of regulated prices in selected industries
• Promotion decision- communication process, promotion mix,
promotion strategies with reference to consumer and
industrial products
• Advertising and personal selling decision
• Distribution management – importance of distribution in
developing country (Role of middleman, identification,
selection, and managing dealers, distribution channels,
channel management – Physical distribution
• Performance and control – Marketing audit*****

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 Evaluation
• End Term Exam …..60 marks
• Test - 10 marks
• Assignment -15 marks
• Presentations …..15 marks
• Total 100 marks**

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 Text Books
• Marketing Management - Kotler, Keller, Koshy & Jha –
14th edition,
• Basic Marketing,13th edition, Perrault and McCarthy
• Marketing management – Indian context Dr.Rajan
Saxena
• Marketing Management – Ramaswamy &
Namkumari
• R. L. Varshney & S.L.Gupta: Marketing Management
An Indian Perspective (Sultan Chand) .

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 What is Marketing?

• Marketing is about identifying and meeting

human needs.
• One of the shortest definition of marketing is
“meeting needs profitably”
 “TATA Swach”
• Availability of safe, clean drinking water, especially to
poor section of society
• Simple technology, no need for electricity, no running
water, suitable for rural areas. Made from natural rice
husk ash filled with nano-silver particles.
• Price Rs.1000/-

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 Water Purifiers…A Good Marketing!
• Eureka Forbes - “Aquasafe”, Unilever - “Pureit” !!!
• Water Purifiers from Ereka Forbes & Hindustan
Unilever, Kent, Rio….the list goes on!!!
• Unilever came out with battery-operated water
purifiers at lower prices. Added value!
• Initiatives that address the ‘unmet needs’ of the
masses through appropriate technology and product
design at affordable price points to reflect a good,
contemporary, marketing thought’
• Next BIG thing? Pure air – the air purifiers!!!
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 What is Marketing?

• Ebay - recognized that people were unable to

locate some of the items they desired most,
they created an online auction clearing
house.
• IKEA - realized people wanted good
furnishings at substantially lower price, it
created knock down furniture.
 What is Marketing?

• IKEA—which itself is an acronym for Ingvar

Kamprad (the founder), Elmtaryd (the farm in
which he grew up) and Agunnaryd (the village
in which he grew up)—says that the name
convention comes from the fact that the
founder of the company is dyslexic and
needed a code to classify the products.
 The Nature of Marketing

What is Marketing?
• An art
• A science
• A business function
• A process
• A relationship
• A system
 Definition of 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 benefits the
organization and its stakeholders.
American Marketing Association
 Marketing
• Marketing means
(a) understanding and responding to customer
needs
(b) serving them in such a way that it helps the
selling organization fulfill its objective of
profit maximization

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 Definition of 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 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.
 Scope of Marketing?
• Goods – cars, trucks, TVs, machines, watches, cosmetics

• Services – hotel, airlines, mobile internet, banks, insurance

• Events – sports, social events, exhibitions, confrerences
• Experiences – water park, amusement park , night safari
• Entertainment – movies, theatre
• Persons – celebrity, CEO, politicians,
• Places – tourism, learning
• Properties – real, financial
• Organization – health, women empowerment, education
• Information – X ray machine, computers, photocopiers, phone
• Ideas – Revlon: factory makes cosmetics, we sell dreams!!
 Markets

• Traditionally “market’ was physical place where

buyers and sellers meet to buy & sell goods.
• Term “market” covers various group of customers
• Need markets (diet-seeking products), product
markets (shoe market), demographic market
( youth market, kids market), geographic market
( chinese market, Europe market, NEWS India
market)
• Voter market, labor market, donor market etc.
 Markets
• Marketplace – physical
• Marketspace – digital
• Metamarkets – cluster of complimentary products
& services closely related in the minds of the
consumer; but spread across a diverse set of
industries
• E.g. automobile meta market consists of
automobile manufacturers, new and used car
dealers, financing companies, insurance
companies, mechanics, spare parts dealers, service
shops, auto magazines, ancillary industries
 Simple Marketing System

Communication

Goods/services
Industry Market
(a collection (a collection
of sellers) Money of Buyers)

Information
 A Three-Way Exchange

Parental recognition, Sense

of pride
Parent
Parent
Tuition, donations
College
College Money,
Appreciation,
grades, feeling of encouragement,
or
or support
accomplishment
University
University
Tuition, labor (work study),
class attendance
Student
Student
Education, personal growth,
sense of independence and
spirit
 Structure of Flows in Modern Market
Economy
Resources Resources
Money Resource Money
markets
Services, Taxes,
money goods
Services, Taxes
money
Manufacturer Government Consumer
markets markets markets
Taxes,
goods Services
Services, Taxes,
money goods
Money Money
Intermediary
Goods, services markets Goods, services
Core Concepts of Marketing
Target Markets & Segmentation
Needs, Wants, and Demands
Brand or Offering
Value and Satisfaction
Exchange and Transactions
Relationships and Networks
Marketing Channels
Supply Chain
Competition
Marketing Environment
 Target Markets & Segmentation

• Not everyone likes the same cereal, restaurant,

college, or a movie
• Identify & profile distinct group of potential
customers who might require varying products &
services
• By examining the demographics, psychographics,
geographic, behavioural etc
• Identify market segments with greatest opportunities
– Target Markets

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• Horlicks, leading health-food drink brand from GSK has been
providing “pleasurable nourishment” to a wide range of
consumers from children to adults to elderly people.
• They defined customers in terms of not only age groups (i.e.
children, teenagers, adults, elderly), but by many other
parameters like occupation, eating habits, lifestyle, women in
reproductive & nursing age, calorie sensitive, health
conscious.
• For each of the above segments they offer Horlicks – with
varied features.

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 Ideal marketing
• Every human being is different from others
• His needs will therefore be different from others and
unique
• In ideal marketing you will contact each person for
his / her specific needs
• Make a product for him
• Supply the product to him
• Costly affair
• No economies of scale either in contacting the
consumer or in manufacturing the product**
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 Segmentation
• Group the consumers who share a similar set of needs and
wants
• Segmentation
• It is creating small homogeneous groups of consumers out of
the total heterogeneous market
• Customer segmentation is a method for grouping customers
based upon similarities they share with respect to any
dimensions you deem relevant to your business - whether it
be customer needs, channel preferences, interest in certain
product features, profitability, location etc.**

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 Needs, Wants & Demands

• A human need is a state of felt deprivation of some

basic satisfaction.
• Air, food, water, clothing, shelter to survive, safety,
belonging, esteem.
• Recreation, education, entertainment
• They pre-exists.
• Stated needs, Real needs, Unstated needs, Delight
needs, secret needs

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 Needs, Wants & Demands

• Stated needs : the customer wants an expensive car.

• Real need : the customer wants a car whose
operating cost , not initial price, is low.
• Unstated need : the customer expects good service
from the dealer
• Delight needs: the customer buys the car and
receives a complimentary US Road atlas
• Secret needs : the customer wants to be seen by
friends as a value0oriented savvy customer.

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MASLOW'S THEORY
 Needs, Wants & Demands

• These needs become wants when they are directed

to specific objects that might satisfy the need
• A consumer in US needs food but wants hamburger,
french fries, soft drink
• An hungry Indian needs food but may want Vada Pav,
chapatis, rice, curry and yogurt
• Wants of a North Indian will vary from that of a
South India, though the need may be common i.e.
food!!
• Wants are shaped by our society**
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 Needs, Wants & Demands

• Demands are wants for specific products backed by an ability

to pay.
• Example – I am thirsty. Quenching the thirst is my need.
• Water, soft drink, juice, coconut water, shade are my wants.
• I can afford ONLY water, which I buy… resulting in demand in
the market for water!
• Do marketer creates needs? Needs pre-exist!
• Marketers along with other social factors influence wants.**

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 Brands or Offerings
• Product includes goods & services
• A brand is an offering from a known source.
• A brand name such as McDonald’s carries many
associations in the minds of people: hamburgers, fun,
children, fast food, golden arches, party. These
associations make up the brand image.
• McDonald’s means burgers, cleanliness,
convenience, courtesy & service.
• Park Avenue
• Maruti
• Mahindra 33 of 30
 Brand & Offerings

• A product is any offering that can satisfy a need or

want, such as one of the 10 basic offerings of goods,
services, experiences, events, persons, places,
properties, organizations, information, and ideas.
• Marketers offer a set of benefits that satisfy the
needs. The intangible proposition is made physical by
an offering.
• It can be a combination of product, services,
information etc.

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Customer Value, Satisfaction, and Loyalty

Holistic Marketing
• Inform
• Engage
• Energize
 Traditional Organization vs.
Customer-Oriented Organization
 Customer Perceived Value

Customer-
Economic perceived
Value
Evaluating

Functional Obtaining

Using

Psychological Disposing
Total Customer Total Customer
Benefit Cost
 Customer-
perceived value

Determinants Total customer

benefit
Total customer
cost
of Customer
Perceived Product
benefit
Monetary
cost

Value Services
benefit
Time
cost

Personal Energy
benefit cost

Image Psychological
benefit cost
 Value Concepts – Mahendra Tractor

Product:
Reliability
Durability
Performance
Service:
Resale
Delivery
Cost
Training
Maintenance Cost:
Reputation Manufacturing cost
After sales Margin
 Value Concepts – Mahindra Tractor
 Suppose a farmer wants to buy a tractor for his
farming activity from either Mahindra or Eicher. He
wants the tractor to deliver certain levels of
reliability, durability, performance, and re-sale value.
 The buyer decides Mahindra has greater product
benefits based on his perceptions of those attributes.
He also perceives
differences in the accompanying
services— delivery, training, and
maintenance—and decides
Mahindra provides better service as well as more
knowledgeable and responsive staff.
 Value Concepts – Mahindra Tractor
 Finally, he places higher value on Mahindra’s
corporate image and reputation. He adds up all the
economic, functional, and psychological benefits
from these four sources—product, services,
personnel, and image—and perceives Mahindra as
delivering greater customer benefits. The buyer sees
its offer as worth Rs.10L.
 Further, suppose Mahindra’s cost of producing the
tractor is Rs.6L. This means Mahindra’s offer
generates Rs.4L over its cost, so the firm needs to
charge between Rs. 6 L and Rs.10L.
 If it charges less than Rs. 6L it won’t cover its costs; if
it charges more, it will price itself out of the market.
 Value Proposition
Value proposition is whole cluster of benefits the company
Volvo
Promises to deliver. It is beyond core positioning of the product .

Core positioning:
• Safety

Other benefits:
• Good performance
• Design
• Environmentally
friendly
 Value Proposition
 The value proposition is a promise about the
experience customers can expect from the
company’s market offering and their relationship
with the supplier.
 Whether the promise is kept depends
on the company’s ability to manage its value
delivery system.
 The value delivery system includes all the
experiences the customer will have on the way to
obtaining and using the offering.
 At the heart of a good value delivery system is a set
of core and other business processes that help
deliver distinctive consumer value.
 ed
fi n
De Satisfaction
A person’s feelings of pleasure or
disappointment that result from
comparing a product’s perceived
performance to (or outcome) to
expectations.
 Customer Satisfaction
• In general, satisfaction is a person’s feelings of
pleasure or disappointment that result from
comparing a product’s perceived performance (or
outcome) to expectations.
• If the performance falls short of expectations, the
customer is dissatisfied. If it matches expectations,
the customer is satisfied. If it exceeds expectations,
the customer is highly satisfied or delighted.
• Type of loyalty relationship the customer has with
the brand. Consumers often form more favorable
perceptions of a product with a brand they already
feel positive about.
 Customer Satisfaction

Expectations
 Customer Expectations
 Expectations result from past buying experience;
friends’ and associates’ advice; and marketers’ and
competitors’ information and promises.
 If marketers raise expectations too high, the buyer is
likely to be disappointed. If too low, it won’t attract
enough buyers (although it will satisfy those who do
buy).
 Some of today’s most successful companies are
raising expectations and delivering performances to
match.
 Maruti found success in India launching fuel-efficient,
low-cost, high-quality variety of cars, supported by
service network and re-sales value.
 Value & Satisfaction
• Satisfaction reflects a person’s judgment of a
product’s perceived performance in relation to the
expectations.
• Value as a ratio between what the customer gets
and what he gives. The customer gets benefits
and assumes costs, as shown in this equation:
Value = Benefits/Cost , which is
= Functional benefits + Emotional benefits_______________
Monetary costs + time costs + energy costs + psycho costs
• Value is ‘Quality, Service & Price’
• Value means “Paisa Vasool”!!!
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 ed
fi n
De Customer Loyalty
“A deeply held commitment to re-buy
or re-patronize a preferred product or
service in the future, despite situational
influences and marketing efforts having
the potential to cause switching
behavior.”
-- Oliver
 Exchange & Transactions
• Exchange, the core of marketing, involves
obtaining a desired product from someone
by offering something in return.
• Exchange is a value-creating process
because it normally leaves both parties
better off, benefitted, satisfied.
 About… Transactions
• There are at least two parties.
• Each party has something that might be of
value to the other party.
• Each party is capable of communication and
delivery.
• Each party is free to reject the exchange
offer.
• Each party believes it is appropriate or
desirable to deal with the other party.
 Marketer & Prospect
• A marketer is someone who is seeking a
response (attention, a purchase, a vote, a
donation) from another party, called the
prospect.
• If two parties are seeking to sell something
to each other, both are marketers.
 Relationships and Networks
• Relationship marketing aims to build long-
term mutually satisfying relations with key
parties— customers, suppliers.
• A marketing network consists of the
company and its supporting stakeholders
(customers, employees, suppliers, lenders,
distributors, community, society and
government) with whom it has built
mutually profitable business relationships.
 Marketing channels
• Communication –newspapers, magazines,
radio, television, mail, telephone,
billboards, posters, fliers, CDs, audiotapes,
and the Internet.
• Distribution – direct, MLM, chain of
stockists, retail, consumers
• Service – warehouses, transports, banks,
insurance

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 Supply Chain

• Raw material, to components to finished products to

final buyers
• Think of a packet of cashew nuts. The supply chain
involves farming, harvesting, processing, packing,
marketing, branding, distributing, retailing.
• This supply chain represents a value delivery system.
Each company captures only a certain percentage of
the total value generated by the supply chain.
• Aim is to capture a higher percentage of supply chain
value.
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Evolving Views of Marketing’s Role

Production

Marketing

Customer
Hu ourc
res
ma e s

c e
n

an
Fin

The customer as the controlling

function and marketing as the
integrative function
 Environment of Marketing

Direct Indirect
Impact Impact

Consumers, shareholder, Economical, political, Socio-cultural

Suppliers, competitors, and Technological factors. (They affect
labour and govt. officials (They investment, organization
affect plans, policies & strategies.) & structure)
 Marketing Environment
• The broad environment consists of six
components:
• Demographic
• Economic
• Natural
• Technological
• Political-legal
• Social-cultural
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 Company Orientations Toward The
Marketplace
• Marketing activities should be carried out under a
well-thought-out philosophy of efficient, effective,
and socially responsible marketing.
• In fact, there are five competing concepts under
which organizations conduct marketing activities:
– Production concept
– product concept
– Selling concept
– Marketing concept
– Societal marketing concept
 Production concept
• One of the oldest in business, holds that consumers prefer
products that are widely available and inexpensive. Managers
of production-oriented businesses concentrate on achieving
high production efficiency, low costs, and mass distribution.
• This orientation makes sense in developing countries, where
consumers are more interested in obtaining the product than
in its features.
• Customers prefer products that are widely available &
inexpensive. The critical aspect is to produce as much as
possible at lowest cost.
• Lenovo, Haier in China. Japanese automobile giants

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 Product concept
• Holds that consumers favor those products that offer the
most quality, performance, or innovative features. Managers
in these organizations focus on making superior products and
improving them over time, assuming that buyers can appraise
quality and performance.
• Product-oriented companies often design their products with
little or no customer input. These organizations too often are
looking into a mirror when they should be looking out of the
window.
• Did the “Kaali-Peeli taxi service” overlook the growing
competition from auto, A/C buses, Uber, Ola, Meru, Tabcab?

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 Selling concept
• • Holds that consumers and businesses, if left alone,
will ordinarily not buy enough of the organization’s
products. The organization must, therefore,
undertake an aggressive selling and promotion effort.
• This concept assumes that consumers must be
coaxed into buying, so the company has a battery of
selling and promotion tools to stimulate buying.
• The selling concept is practiced most aggressively
with unsought goods—goods that buyers normally
do not think of buying, such as insurance
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 Marketing concept
• Holds that the key to achieving organizational goals consists of
the company being more effective than its competitors in
creating, delivering, and communicating customer value to its
chosen target markets.
• The selling concept takes an inside-out perspective. It starts
with the factory, focuses on existing products, and calls for
heavy selling and promoting to produce profitable sales.
• The marketing concept takes an outside-in perspective. It
starts with a well-defined market, focuses on customer needs,
coordinates activities that affect customers, and produces
profits by satisfying customers.

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 Societal Marketing Concept
• The societal marketing concept holds that the
organization’s task is to determine the needs,
wants and interest of target markets and to
deliver the desired satisfactions more
effectively and efficiently than competitors in a
way that preserves or enchances the
customer’s and the society’s well-being.
 Societal Marketing Concept

• Social responsibility also requires that

marketers carefully consider the role that they
are playing and could play in terms of social
welfare.
• Different names for this situation are
Humanistic Marketing, Ecological Marketing
and Societal Marketing concept. Also called as
Cause-related Marketing.
Holistic Marketing
 Internal Marketing
• Internal marketing is the task of hiring,
training, and motivating able employees who
want to serve customers well.
• It must take place at two levels
– Various marketing functions must be integrated
– Marketing thinking must be pervasive throughout
the company, in all departments & at all levels
 Internal Marketing
• Xerox, for example, goes so far as to include in
every job description, an explanation of how
each job affects the customer.
• Xerox factory managers know that visits to the
factory can help sell a potential customer if the
factory is clean and efficient.
• Xerox accountants know that customer attitudes
are affected by Xerox’s billing accuracy.
Contrast Between Sales Concept & Marketing Concept
Starting point Focus Means Ends

Factory Products Selling and Profits through

through
promoting
promoting sales volume
sales volume

a) The selling concept

Target Customer Integrated Profits through

market needs marketing customer satisfaction

b) The marketing concept

 Contrast Between :
Sales Concept & Marketing Concept
• Selling focuses on the needs of seller;
marketing on the needs of the buyer.
• Selling is preoccupied with the seller's need
to convert his product into cash;
• Marketing with the idea of satisfying the
needs of customers by means of the product
and whole cluster of things associated with
creating, delivering and finally consuming it.

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 Contrast Between :
Sales Concept & Marketing Concept
• Selling starts with factory, focuses on existing
products, and calls for heavy selling and
promoting to produce profitable sales.
• Marketing starts with a well-defined market,
focuses on customer needs, co-ordinates all
activities that will affect customers and
produces profits by satisfying customers.

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