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Marketing Management

Chapter 1

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What is Marketing?
Marketing is the delivery of customer
satisfaction at a profit.
 Marketing (management) is the process of planning and
executing the process of planning and executing the conception,
pricing, promotion and distribution of ideas, goods and services
to create exchanges that services to create exchanges that
satisfied individual and organizational” objectives.”
 By American Marketing By American Marketing
Association Association

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The Goal of Marketing is:
To attract new customer by promising
superior value, and to keep current
customers by delivering satisfaction.

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Customer orientation
 Marketing, more than any other business function,
deals with customers.
 Creating customer value and satisfaction are at the
very heart of modern marketing thinking and
practice.
 Some people believe that only large business
organizations operating in highly developed
economies use marketing, but sound marketing is
critical to the success of every organization – whether
large or small, for profit or non – profit, domestic or
global.

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The Overall Themes of Marketing
The Traditional Marketing Mix
 Product
 Price
 Promotion
 Place
Marketing Defined
 Many people think of marketing only as selling and advertising.
 Selling and advertising are only the tip of the marketing ice-berg.
 Marketing is one of three key core functions that are central to all
organizations.
 Marketers act as the customers’ voice within the firm and marketers
are responsible for many more decisions than just advertising or sales:
 Analyse industries to identify emerging trends.
 Determine which national and international markets to enter or
exit.
 Conduct research to understand consumer behavior.
 Design integrated marketing mixes – products, prices, channels of
distribution, and promotion programs.
Marketing is a social and managerial process by which individuals and
groups obtain what they need and want through creating and
exchanging products and value with others.

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To explain marketing definition, we
examine the following important terms :
 Needs, wants, and demands
 Products and services
 Value, satisfaction and quality
 Exchange, transactions, and relationships
 Markets

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Needs, Wants, and Demands
Needs:
 The most basic concept underlying marketing is that of human needs.
 Human needs are states of felt deprivation.
 Human have many complex needs:
 Physical needs for food, clothing, warmth, and safety
 Social needs or belonging and affection
 Individual needs for knowledge and self – expression
Wants:
 Want are the form taken by human needs as they are shaped by culture and
individual personality.
 People have almost unlimited wants but limited resources.
 They want to choose products that provide the most value and satisfaction for
their money.
Demands:
 When backed by buying power, wants become demands.
 Consumers view products as bundles of benefits and choose products that give
them the best bundle for their money.
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Products and Services
Product:
 Anything that can be offered to a market to satisfy a
need or want.
 The concept of product is not limited to physical
objects – anything capable of satisfying a need can
be called a product.
Services:
 In addition to tangible goods, products also include
services, which are activities or benefits offered for
sale that are essentially intangible and do not result
in the ownership of anything.

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Values, Satisfaction, and Quality
Values:
 Customer value is the difference between the values the customer gains from
owning and using a product and the costs of obtaining the products.
 Customers often do not judge product value and costs accurately or objectively.
They act on perceived value.
Satisfaction:
 Customer satisfaction depends on a product’s perceived performance in
delivering value relative to a buyer’s expectation.
 If the product’s performance falls short of the customer’s expectations, the
buyer is dissatisfied.
Quality:
 Customer satisfaction is closely linked to quality.
 Quality has a direct impact on product performance.
 Quality can be defined as “freedom from defects”.
 TQM programs designed to constantly improve the quality of products, services,
and marketing processes.

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Exchange, Transactions,
and Relationships
Exchange :
 The act of obtaining a desired object from someone
by offering something in return
Transaction :
 A trade between two parties that involves at least
two things of value, agreed – upon conditions a time
of agreement, and a place of agreement.
Relationship marketing :
 The process of creating, maintaining, and enhancing
strong, value – laden relationships with customers
and other stakeholders

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Markets
The set of all actual and potential buyers of a
product or service
Communication

Products / Services
Industry Market (a
(a collection collection of
of sellers) buyers)
Money

Information

A simple marketing system


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Main factors and forces in a modern marketing system

Competitors

Marketing
intermediaries End user market
Suppliers
Company
(marketer)

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Marketing Management
 What is marketing management?
« 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 » (Philip Kotler)
The analysis, planning, implementation, and control of
programs designed to create, build, and maintain
beneficial exchanges with target buyers for the purpose of
achieving organizational objectives.
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Marketing Management Involves:
 Demand Management : The organization has a
desired level of demand for its products. At any point
in time, There may be no demand, adequate
demand, irregular demand, or too much demand,
and marketing management must find ways to deal
with these different demand states.
 Building Profitable Customer Relationships :
Beyond designing strategies to attract new customers
and create transactions with them, companies now
are striving to retain current customers and build
lasting customer relationships.

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MARKETING MANAGEMENT PHILOSOPHIES

 The role that marketing plays within a company


varies according to the overall strategy and
philosophy of each firm.
 There are five alternative concepts under which
organizations conduct their marketing activities:
 Production concept

 Product concept

 Selling concept

 Marketing concept

 Societal marketing concepts

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Production Concept (before
1930):
demand > supply

The philosophy that consumers will


favour products that are available and
highly affordable and that management
should therefore focus on improving
production and distribution efficiency.

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Product Concept
The philosophy that consumers will
favour products that offer the most
quality, performance, and innovative
features.

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Selling Concept (1930-1950):
supply > demand

The idea that consumers will not buy


enough of the organization’s products
unless the organization undertakes a
large – scale selling and promotion
effort.

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Marketing Concept (post-
1960s):
The marketing management philosophy
that holds that achieving organizational
goals depends on determining the
needs and wants of target markets and
delivering the desired satisfactions more
effectively and efficiently than
competitors do.
Analyze consumer needs before
producing and selling, market
orientation, competition 20
The Selling and Marketing Concepts Contrasted

Starting point Focus Means Ends

Selling
Factory Existing Profits through
and promoting
products sales volume

The selling concept

Profits through customer


Market Customer needs Integrated satisfaction
marketing

The marketing concept

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Societal Marketing Concept
The idea that the organization should
determine the needs, wants, and
interests of target markets and deliver
the desired satisfactions more
effectively and efficiently than
competitors in a way that maintains or
improves the consumer’s and society’s
well – being.

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Three Considerations Underlying The Societal
Marketing

Society
(Human welfare)

Societal
marketing
concept

Consumers Company
(Want satisfaction) (Profits)

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Functions of Marketing
Functions of Exchange: a) Buying and Assembling
b) Selling
Functions of Physical Supply:
a) Transportation
b) Storage
Facilitating Functions: a)Standardization & Grading
c) Branding, Packaging & Labelling c) Insurance d)
Financing e) Risk Taking/ bearing f) Securing Marketing
Information g) Advertising
h) Market Research i) Marketing Management

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Nature of Marketing:

 1. Marketing is an Economic Function


Marketing embraces all the business activities involved in
getting goods and services , from the hands of producers into
the hands of final consumers. The business steps through which
goods progress on their way to final consumers is the concern
of marketing.
 2. Marketing is a Legal Process by which Ownership
Transfers
In the process of marketing the ownership of goods transfers
from seller to the purchaser or from producer to the end user.

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Nature of Marketing:
 3. Marketing is a System of Interacting Business Activities
Marketing is that process through which a business enterprise,
institution, or organisation interacts with the customers and
stakeholders with the objective to earn profit, satisfy customers,
and manage relationship. It is the performance of business
activities that direct the flow of goods and services from producer
to consumer or user.
 4. Marketing is a Managerial function
According to managerial or systems approach – “Marketing is the
combination of activities designed to produce profit through
ascertaining, creating, stimulating, and satisfying the needs
and/or wants of a selected segment of the market.”
 According to this approach the emphasis is on how the individual
organisation processes marketing and develops the strategic
dimensions of marketing activities.
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Nature of Marketing:
5. Marketing is a social process
 Marketing is the delivery of a standard of living to society. According
to Cunningham and Cunningham (1981) societal marketing
performs three essential functions:-
 Knowing and understanding the consumer’s changing needs and
wants;
 Efficiently and effectively managing the supply and demand of products
and services; and
 Efficient provision of distribution and payment processing systems.
6. Marketing is a philosophy based on consumer orientation and
satisfaction

7. Marketing had dual objectives – profit making and consumer


satisfaction

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MARKETING CHALLENGES
INTO THE NEW CENTURY
 GROWTH OF NON-PROFIT MARKETING
 THE INFORMANTION TECHNOLOGY-SOCIAL MEDIA ON THE
RISE
 RAPID GLOBALIZATION
 THE CHANGING WORLD ECONOMY
 THE CALL FOR MORE ETHICS AND SOCIAL RESPONSIBILITY
 Industry consolidation
 RAPIDLY CHANGING POLITICAL LEGAL ENVIRONMENT
 Customers Want More From Brands
 Internet Marketing and Mass Media

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WHAT IS SELLING?
Selling is a function in which goods are exchanged
with money. So, selling function has major role in
marketing. Selling does not mean only taking money
and giving goods. It has broad meaning in marketing,
in which include the activities such as selling goods,
identifying potential customers, creating demand ,
providing information and services to buyers etc.
Selling is a marketing function that involves determining
client needs and wants and responding through planned,
personalized communication that influences purchase
decisions and enhances future business opportunities.
Because selling is planned and personalized, it goes
beyond mere order-taking or customer service. 29
Nature of selling:
Selling is the act of transferring ownership of goods to
buyer through different processes. For this the buyer
pays price of the goods. Thus the following describe the
nature of selling as a function:
 Selling is planned communication
 Adds utility.
 Helps customers determine needs.
 Creates desire for products
 Selling skills
 Belief in selling as a service
 Communication skills.

 Creativity. 30
Types of Marketing
• Transactional Marketing
• Relationship Marketing
• Promise Marketing
• Digital Marketing
• Societal Marketing
• Experimental Marketing

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Transactional Marketing
When marketing is all about making the sale
A promotional strategy involves focusing on
achieving quick sales without a significant
attempt to form a long term customer
relationship.

Transactional marketing follows the 4 P’s of the marketing


1) Product – Creating the product which satisfies the needs
of the customers. Since it is the beginning of the
transaction, it plays a very important role.
For example: A detergent which cleans clothes better than
any other product in the market. The aim here will be to
satisfy the customer’s needs to clean the stubborn stains
off the clothes.
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2) Price – Providing the product at a price which
is convenient and attractive for the customer
once he considers the product based on his
requirement along with some margin for the
profit . For example: If the detergent is priced lower than
the other products in the market, then there is more
chance that customers will try the product to see its worth.

3) Place – Using an efficient distribution system


to help increase the reach of the product. The
product should be placed where the customer
can easily find it. Because if the customer does
not find the product at right place, then that may
lead to loss in sales
For example: The detergent here needs to be placed in all
the grocery and convenient stores so that the customers
can pick it up while shopping
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Transactional Marketing

4) Promotion – Effective communication about


the product and using buzz words like discounts
in order to attract the customer. The promotions
should urge the customer to buy the product
immediately. There can be in-store promotions or
some online coupons to attract the customer.
For example: Some kind of in-store discounts on
the detergent may help the customer make the
choice.

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Relationship Marketing

The focus of marketing has shifted from


acquisitions/transaction towards a retention/
relationship focus.
RM is a philosophy of doing business, that focuses on
keeping and improving relationships with current
customers rather than on acquiring new customers.
It is assumed that customers seek to have an ongoing
relationship with one organization than to switch
continually among providers in their search for value.

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Relationship Marketing-The
Evolution
Firms relationship with customers, like other social
relationships tend to evolve overtime,
Thus we can summarize the relationship as:
• Customers as Strangers:
• Customers as Acquaintances
• Customers as Friends
• Customers as Partners

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Relationship Marketing
• Enhance • Acquire

Customer Customer
as a as a
partner stranger

Customer
Customer
as an
as a
acquainta
friend
nce
• Retain • Satisfy

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Relationship Marketing-Coke
Hello Happiness,” a new video from Coca-Cola, opens
with footage of migrant laborers in Dubai, standing
before dawn in a patch of dirt as they wait for a van to
pull up and shuttle them to work. Later, hunched on
sagging bunk beds, crowded on the floor of a small room
during mealtime with their elbows nearly touching, they
tell us that they love and miss their families, and that
they wish they could hear their children’s voices more
often. They earn $6 a day and that it costs nearly a
dollar per minute to call home—so phone calls are rare.
The idea coke came with was- “So what if every Coke
came with a few extra minutes of happiness?”
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Relationship Marketing-Coke

In March, Coke installed five special phone booths in


Dubai labor camps that accepted Coca-Cola bottle caps
instead of coins. In exchange for the cap from a bottle
of Coke—which costs about fifty-four cents—migrant
workers could make a three-minute international call.
They say: “I’ve saved one more cap, so I can talk to
my wife again tomorrow,” one man tells the camera.
More than forty thousand people made calls using the
machines. Then, in April, after the booths had been up
for about a month, the company dismantled them

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Experimental Marketing
Experimental marketing is the process of testing a
variety of marketing strategies to see which ones work
the best with the targeted customers and which ones
generate new leads for building new customer
markets.
Experimental marketing consists of research based
on a hypothesis of what kinds of marketing activities
will appeal to potential customers, then collecting and
analyzing the resulting data, and developing and
testing the product to see if the marketing activity was
successful. This is called Pilot Testing.
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Experimental Marketing
With so much marketing being done digitally
now (think social media, email, and web pages),
it's easier than ever to develop marketing
campaigns based on real-world experience and
driven by actual data, not by what the
marketers think will appeal to their customers.
This is a real advantage in today's competitive
marketplace!

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