Marketing Management Notes PDF

Sr no. Topic Pg no. 1 Introduction 2 2 Marketing Vs Selling 2 3 Marketing Function 3 4 5 Ms of Marketing 7 5 STP 8 5 Marketing Mix...

Sr no. Topic Pg no. 1 Introduction 2 2 Marketing Vs Selling 2 3 Marketing Function 3 4 5 Ms of Marketing 7 5 STP 8 5 Marketing Mix 12 6 Product Levels 15 7 BCG Matrix 17 8 Promotion Mix Elements 19 9 Macro Environmental Factors 23 10 Maslow’s Hierarchy of Needs 27 1  Introduction Definition: Dr. Philip Kotler described marketing as "the science and art of identifying, creating, and delivering value to meet the needs of a specific market while generating a profit." Meaning: A market refers to a venue where buyers and sellers meet to conduct transactions involving the purchase and sale of goods or services. Marketing, on the other hand, is a broader concept compared to a market. It represents a structured process of trade that encompasses sales and various activities related to the exchange of goods and services. MARKETING VS SELLING: 2 MARKETING FUNCTION The 7 marketing functions Here are the seven marketing functions, along with their benefits for marketing professionals: 1. PROMOTION Promotion enhances brand awareness while informing target audiences about a brand's products or services. It focuses on familiarizing potential consumers with your brand. This marketing function takes various forms, and marketing professionals customize each form to align with a specific product, brand, or target audience. Promotion may include any of the following strategies:  Email marketing  Social media advertisements  Public relations  Digital or print advertising  Content marketing  Brand partnerships  Influencer marketing 3   Events 2. SELLING As a potential customer progresses, successful marketers may introduce their product and answer questions customers may have. Effective selling techniques can help you distinguish your brand from competitors. Marketers and salespeople may collaborate to determine how to best position their product within their market and sell it to potential customers. 3. PRODUCT MANAGEMENT Product management involves the development, design, and enhancement of products or services. A marketer's role in product management is to ensure that the final product satisfies customer needs. This involves evaluating the product's overall appearance, functionality, and delivery process. 4. PRICING Setting a price for a product involves balancing various factors of cost and value. Marketers aim to find a price that aligns with customers' perceived value of the product and its actual production cost. Additional considerations include competitor pricing and the amount customers are willing to pay. Marketing professionals analyse these factors to determine the appropriate price for a product or service. Pricing a product can be challenging, but thorough market research can support an informed decision. Regardless of the chosen price, it is crucial to align promotions and branding with that price. For instance, marketing a $1,000 handbag as a luxury item highlights its value and may persuade customers to buy it. 5. MARKETING INFORMATION MANAGEMENT Collecting and storing data, such as customer demographics and preferences, is 4 essential. This information often directly pertains to your target audience for products and services. It can also guide effective business decisions across the company, so consider sharing your data and insights with other departments. You can gather relevant information from various marketing tools, such as: Surveys Online reviews Social media engagements Market research reports 6. FINANCING Financing is an essential marketing function that involves obtaining funding— either through internal resources or external sources—to support the creation and execution of marketing campaigns. It is vital for marketing teams to ensure that their annual budget includes enough funds to improve the effectiveness of previous campaigns and to stay current with evolving industry trends. When a marketing team successfully drives revenue growth through high-quality campaigns, it can effectively demonstrate its value to the company. This consistent upward trajectory not only highlights the team's contribution but also increases the likelihood of securing additional funding in the future, as they can showcase a clear and measurable return on investment. 7. DISTRIBUTION Distribution is the process of transporting your company's products or services to your customers. There are several physical and digital methods of distribution, including: Online store Catalogs or magazines Sales calls Retail stores Wholesalers 5 Marketers typically select the distribution channel that aligns best with a specific product, brand, or target audience. It is essential to choose a sales location that your target audience frequently visits. Distribution, as a marketing function, requires coordination among departments to ensure every product is delivered to consumers as intended. ------------------------------------------------------------------------------------------------ 6 5 Ms OF MARKETING The five M's of advertising are utilized to explain advertisements and identify marketing elements. Businesses employ these M's in various ways to manage their advertising efforts, maximize market share, and satisfy their customer base in a profitable manner.  Mission  Money  Message  Media  Measurement --------------------------------------------------------------------------------------------------------------------------- 7 STP STP marketing involves using the STP (Segmentation, Targeting, and Positioning) model to develop marketing strategies that center on customers, identifying, and refining marketing efforts to target specific segments and audiences. What is The STP (Segmenting, Targeting, and Positioning) Model? The STP model is designed to create marketing segments where businesses can gain a competitive advantage to apply in their marketing strategies. This model helps identify the most suitable target audiences and segments, determine which ones are the most beneficial, and position the business effectively within those segments. The STP model is based on three key steps: Segmentation, Targeting, and Positioning. Segmenting In summary, segmentation in the STP model refers to the methods and actions used to break down a larger market opportunity into more specific segments, often through research or analytics. For a business, understanding who the customers are provides a more realistic opportunity to gain a competitive edge, whether through the product itself or from a purely marketing standpoint. The need for segmentation is clear: a business cannot offer its products equally 8 to everyone. While segmentation is valuable for understanding the core characteristics of chosen segments, the way segments are created can limit market opportunities if they are overly diluted. For instance, smaller segments may be unrealistic and unprofitable for a company to target. However, focusing on small or niche segments can provide a starting point for growth, especially for new businesses. Before segmentation, it’s important to understand the role of business goals and determine whether a segment can help achieve them. We need to form realistic segments that a business can effectively serve. But first, identifying customer segments is essential. Various methods can be used to shape a segment, including demographic, geographic, psychographic, behavioural characteristics, and data.  Demographic: Age, marital status, gender, employment, education, income  Geographic and Online Presence: Country, regions, cities, neighbourhoods  Psychographic: Online channels (which channels the segments mostly use, such as social media, search), values, personality, lifestyle, attitudes, interests  Behavioural Characteristics: o How does the segment use products? o What do they seek from the products? o How do they behave on your online platforms (website analytics)? Targeting After creating our segments, then we have to choose which ones work best. Targeting in the STP model refers to choosing the right segments to target and plan its marketing activities. The goal of targeting is to research each segment’s business opportunities and choose the one that aligns with our goals. While it is 9 tempting to achieve growth through multiple segments simultaneously, it is rarely possible. Hence, we must pinpoint the best segment before. By targeting one segment at a time, we can build more measurable strategies to determine whether the segment provided the results we thought it would. Especially as online marketing moves as fast as possible, it enables us to target different segments quickly. To analyze the segments we create, we can use the following questions to determine how good they are and whether it is worth it to us. Measurability Accessibility o What is the size of the segment? o Can we communicate (advertising, for example) with the segment? o How often we can communicate o How costly is it? o The required marketing channels Sustainability o Is the segment profitable enough to sustain marketing efforts? o Does the segment align with our business goals? o Can we realistically offer value to the segment sustainably? Actionability o Can we maintain a competitive edge for the segment? o Can we communicate the way the segment wants? Positioning Position in STP is all about creating products and its marketing to fit a marketing segment you created. And it’s the final step in the process of the model. And as the last step, it’s the most essential. Because if we don’t understand how to position our offering to the chosen segments, we can’t succeed with our marketing strategy. Tools you can use to figure out the positioning: 10  Understand your USP (unique selling point) to the segment Positioning map Through your customers’ problems (and the segment) have, and the solutions you provide should answer the wants and needs of the segments you target. What is your value proposition that drives the competitive edge against your competitors in the segment? When we understand how to position ourselves in the segments and modify the offering to our target audience’s needs, we’ll create a solid base from where we can drive marketing efforts forward to achieve growth. In the positioning phase, you can introduce competing companies and brands to the mix to determine where you stand against them when looking at the chosen segments. It should help in identifying your USP more clearly and whether you need to think about it again. As the company that can fulfill the needs and wants of the segment will achieve better results from marketing. ---------------------------------------------------------------------------------------------------------------- 11 MARKETING MIX An effective marketing strategy convinces potential customers to buy the product or service being offered. One of the most powerful ways to achieve this is by addressing one or more of their fundamental needs. Many business students are taught to use Maslow's hierarchy of needs as a tool to assess marketing efforts. The success of a strategy often hinges on fulfilling one of Maslow's identified needs. Maslow's hierarchy remains a key foundation for many psychological approaches to marketing. For brands and marketers, Maslow's hierarchy of needs is significant in two main ways. First, it helps determine how a product or service can meet the diverse needs of consumers. Second, it shapes the communication strategies brands use when creating their marketing campaigns. 1. Product Dmytro Tsybuliak, a search marketing expert and co-founder of itRate, emphasizes that the product is one of the most essential principles of marketing. The product can be either a good or a service offered to customers. One key aspect that marketers often overlook is assessing the appeal of the product and the market before deciding what to offer. 12 To sell a profitable product, thorough planning is necessary, and it’s important to view the product from the perspective of customers while considering all critical factors in the plan. These factors may include questions such as the customers’ needs, the product’s quality, how it differs from others, its unique selling points, and its safety for customers. 2. Price The price is the money the customer has to pay for the product or services they receive. There are two types of pricing, such as cost-oriented prices and market- oriented prices. In market-oriented prices, there is more to price than the contribution price, and it needs thorough market research. Some things to look into are: What your customers are willing to pay. The price of the same type of products offered by your competitors. And the goals your company has set to reach. 3. Place Place refers to the process of making your products and services available to customers. It is where customers can purchase your products or services, whether in a physical store, an online website, or through multiple channels to reach a wider audience. Choosing the right place that is convenient for customers is crucial for increasing product sales. Therefore, planning the distribution and placement of your product carefully is vital for business success. This involves understanding where your potential customers are located, deciding on the best location, and determining how to connect customers to that location, all of which contribute to business and marketing growth. 4. Promotion Promotion involves raising awareness of your products, services, company, and brand. It encompasses all the methods a company uses to make their products and services known to potential customers. Promotion should provide customers with 13 a reason to choose your product or service and highlight the benefits of using it. Promotion is a fundamental aspect of marketing and is just as important for businesses as the quality of the products they create. It involves communicating with the target audience through various channels to generate awareness of your products and services. ---------------------------------------------------------------------------------------------------------------- 14 PRODUCT LEVELS Customers will choose a product based on their perceived value of it. Satisfaction is the degree to which the actual use of a product matches the perceived value at the time of the purchase. A customer is satisfied only if the actual value is the same or exceeds the perceived value. Kotler attributed five levels to products: The five product levels are: 1. Core benefit: The fundamental need or want that consumers satisfy by consuming the product or service. For example, the need to process digital images. 2. Generic product: A version of the product containing only those attributes or characteristics absolutely necessary for it to function. For example, the need to process digital images could be satisfied by a generic, low-end, personal computer using free image processing software or a processing laboratory. 3. Expected product: The set of attributes or characteristics that buyers normally expect and agree to when they purchase a product. For example, the computer is specified to deliver 15 fast image processing and has a high-resolution, accurate colour screen. 4. Augmented product: The inclusion of additional features, benefits, attributes or related services that serve to differentiate the product from its competitors. For example, the computer comes pre-loaded with a high-end image processing software for no extra cost or at a deeply discounted, incremental cost. 5. Potential product: This includes all the augmentations and transformations a product might undergo in the future. To ensure future customer loyalty, a business must aim to surprise and delight customers in the future by continuing to augment products. For example, the customer receives ongoing image processing software upgrades with new and useful features. ------------------------------------------------------------------------------------------------ 16 BCG MATRIX These products hold a relatively low share in a high-growth market. As a result, they often require significant attention and investment as the business works to increase their market share and turn them into stars. However, if market growth slows before achieving the desired market. The Boston Matrix assesses each product on two measures: Relative market share. The product’s market share compared to its competitor products, which gives a measure of cash generation; and Market growth: how much the market itself is growing, which gives a measure of cash usage. Each product is placed on a straightforward four-by-four grid with relative market share and market growth as the axes (refer to the diagram below), resulting in four possible product categories. These include: Stars These are the top-performing products, holding a high market share in a growing market. They are expected to generate cash and profits over an extended period. Eventually, they may transition into cash cows when the market growth slows. However, these products may require continued investment to maintain their market-leading position. Problem children/Question marks These products hold a relatively low share in a high-growth market. As a result, they often require significant attention and investment as the business works to increase their market share and turn them into stars. However, if market growth slows before achieving the desired market share, they risk falling into the ‘dogs’ category. Therefore, they require careful monitoring. 17 Cash cows These products require minimal attention and primarily serve to generate profits. Often, they act as a valuable resource for funding efforts to turn problem children into stars. However, since a stagnant market can quickly shift into decline, these products may not remain profitable indefinitely. Dogs These products have a low share in a market with little to no growth, making them generally unworthy of significant focus or investment. Products in this category are typically better discontinued as soon as possible unless they manage to deliver reasonable returns with minimal effort or input. Continuing to invest in these products can drain valuable resources that could be better utilized elsewhere. It is essential for businesses to carefully evaluate these products and avoid unnecessary spending to ensure overall financial health and strategic alignment. ------------------------------------------------------------------------------------------------ 18 PROMOTION MIX ELEMNTS 1. ADVERTISEMENTS: The characteristics of advertising are as follows: i. Advertising involves non-personal or mass communication, with no possibility of personal contact. ii. It is a paid form of communication. iii. It operates as a one-way communication channel. iv. An identifiable entity or sponsor, such as a company or individual, provides the advertisement. v. Advertising is an expensive method for promoting sales. vi. It can be reproduced as often as needed. vii. The cost per contact is the lowest. viii. Advertising can utilize various media, including audio-visual, print, and outdoor platforms. ix. It is a widely used and highly popular tool for market promotion. 19 2. SALES PROMOTION: Sales promotion encompasses marketing activities beyond advertising, publicity, and personal selling that aim to boost consumer purchases and enhance dealer performance. It primarily includes short-term and non-recurring incentives offered to both dealers and consumers. Common methods of sales promotion include demonstrations, trade shows, exhibitions, exchange offers, seasonal discounts, free services, gifts, contests, and more. Characteristics of sales promotion are as follows: i. The primary purpose of sales promotion is to induce customers for immediate buying or dealer effectiveness or both. ii. Excessive use of sale promotion may affect sales and reputation of a company adversely. iii. It is taken as supplementary to advertising and personal selling efforts. iv. It involves all the promotional efforts other than advertising, personal selling, and publicity. v. It consists of short-term incentives, schemes, or plans offered to buyers, salesmen, and/ or dealers. vi. It involves non-routine selling efforts. 3. PERSONAL SELLING: Personal selling involves direct, face-to-face communication and presentations with potential or existing customers to promote and sell products. It includes personal interactions and product demonstrations with customers. This method is regarded as highly effective but also a costly marketing tool. Characteristics of personal selling are as follows: i. Personal selling is an oral, face-to-face, and individual presentation to customers. ii. Its primary aim is to promote products or boost sales. 20 iii. It features two-way communication. iv. Immediate feedback can be gathered during interactions. v. It relies on the salesperson's ability to persuade or influence buyers. vi. It offers a more flexible form of marketing communication. vii. The cost per contact is higher compared to advertising. viii. It includes teaching, educating, and assisting customers in making purchasing decisions. 4. PUBLICITY: Publicity is another form of mass communication. Unlike advertising, it is not a paid method but focuses on gaining a favourable response from the public by featuring commercially relevant news in mass media. William J. Stanton defines publicity as “any promotional communication regarding an organization and/or its products where the message is not paid for by the organisation benefiting from it.” It is a traditional aspect of public relations, and the organization does not bear the cost of publicity. Instead, it arises from the work of reporters, columnists, and journalists. Publicity can be seen as part of public relations and includes activities like public speeches, interviews, seminars, charitable donations, and events like inaugurations by celebrities or stage shows that draw media attention. The main characteristics of publicity are: i. It involves obtaining favourable coverage of the company or its offerings on radio, television, or stage, without sponsorship payment. ii. Publicity is an unpaid form of market promotion, though indirect costs may be involved. iii. It may focus on promoting new products, pollution control efforts, employee achievements, or new policies to enhance sales. Its primary goal is to highlight the company’s activities and products, building its image. iv. Publicity is often carried out through newspapers, magazines, radio, or television. 21 v. Organizations lack control over publicity regarding message, timing, frequency, information, and medium. vi. Publicity enjoys high credibility, and its messages are more likely to capture audience attention and prompt reactions. vii. It is more cost-effective than advertising, requiring minimal expenditure for publicizing events or activities. viii. The frequency of publicity in mass media depends on its social relevance or news value, typically appearing only once. 5. PUBLIC RELATIONS: Public relations is a broad term that encompasses building positive relationships not only with customers, suppliers, and intermediaries but also with a wider audience of interested publics. It is important to note that publicity is included within public relations, meaning publicity is a component of public relations. ------------------------------------------------------------------------------------------------ 22 MACRO ENVIRONMENT FACTORS To strategically manage a company, analysts frequently conduct a DEPEST analysis, which examines the demographic, ecological, political, economic, socio-cultural, and technological factors in the macro environment that influence business operations. Understanding each of these factors in detail is essential to gaining insight into how they impact business operations and, consequently, shape the macro environment. Demographic Factors Analysts often perform a DEPEST analysis to strategically manage a company. This analysis evaluates the demographic, ecological, political, economic, socio- cultural, and technological factors within the macro environment that affect business operations. A detailed understanding of these factors is crucial for recognizing their impact on business activities and how they shape the macro environment. 23 Population growth and shifts in demographics are critical areas of focus for any business. To effectively serve its customers and ensure profitability, a company must have a clear understanding of who its patrons are. For any business, marketing heavily relies on closely monitoring demographic changes. Identifying and targeting new or emerging demographic groups is essential. These changes must also be communicated to operations and production to ensure the company consistently meets the needs of its customers. Ecological Factors Ecological factors are natural forces that influence the macro environment, primarily determined by the availability of natural resources used in producing and distributing a company’s goods and services. Environmental concerns impact both the availability and supply of natural resources that a business can access. As populations grow, the demand for natural resources rises, often leading to their depletion. Additionally, population growth contributes to increased pollution, which further affects the environment. Over the years, the shortage of raw materials has intensified, prompting a stronger focus on adopting sustainable business practices. The aim is to reduce environmental strain, support the regeneration of ecological cycles, and ensure that resources become more abundant and accessible in the future. Political Factors Businesses are inherently constrained by the political environment in which they operate. Laws and governments significantly influence how companies function and can even dictate the markets they are allowed to serve. Political factors become particularly critical when a company seeks to enter a new market, especially in another country. It is essential for the company to understand the laws and regulations governing its industry and any specific rules 24 it must comply with. These factors can determine whether entering the new market is financially viable. Technological Factors Technological factors involve the development of new technologies and their influence on products, product innovation, and access to new market opportunities. A prime example of a powerful technological force today is wireless communication. Almost everyone worldwide now owns a smartphone, tablet, or laptop that provides quick and easy internet access. This technology significantly impacts individuals, societies, and their ability to engage with businesses effortlessly. Mile technology is also driving the creation of new devices while rendering outdated ones obsolete. To operate at peak efficiency, companies must consistently adopt the latest technology and remain aware of how technological advancements can enhance customer service. ------------------------------------------------------------------------------------------------ 25 Maslow's Hierarchy Of Needs The theory of Maslow's hierarchy of needs is purposed by Abraham Maslow, which puts forward that people are motivated by five basic categories of needs: physiological, safety, love, esteem, and self-actualization. Maslow suggested that human wants might be arranged in a hierarchy to help us understand what drives people. Physiological Needs Physiological needs are the most basic and essential for survival. These include fundamental physical requirements, such as drinking water when thirsty or eating when hungry. According to Maslow, when a person has multiple unmet needs, they typically prioritize fulfilling these basic needs first. For instance, if someone is extremely hungry, their focus will naturally shift to obtaining food above all else. Another example of a physiological need is the necessity for sufficient sleep. Safety Once physiological needs are met, the next priority is the need for a safe environment. Safety needs become evident early in childhood, as children require 26 stable and secure surroundings and tend to feel fear or anxiety when these needs are unmet. This need helps explain why we often seek comfort and take actions such as opening savings accounts or purchasing insurance. Love and Belonging According to Maslow, the next need in the hierarchy is the desire to feel loved and accepted. This need involves the feeling of belonging to a social group, as well as within the context of family and friends. Crucially, it includes not only the need to feel loved but also the ability to give love to others. Esteem Our esteem needs are related to the desire to feel positive about ourselves. Maslow identified two components of esteem needs. The first is having self- confidence and a sense of self-worth. The second involves feeling appreciated by others, meaning that our accomplishments and contributions are acknowledged by those around us. When these esteem needs are fulfilled, individuals feel confident and view their achievements as meaningful and valuable. On the other hand, if these needs are unmet, individuals may experience what psychologist Alfred Adler referred to as "feelings of inferiority." Self-Actualization Self-actualization refers to the sense of fulfillment or the feeling that we are realizing our full potential. A distinctive aspect of self-actualization is that it varies from person to person. For one individual, self-actualization might involve helping others, while for another, it could be achieving success in an artistic or creative pursuit. In essence, self-actualization is about feeling that we are doing what we believe we are meant to do. According to Maslow, reaching self- actualization is quite rare, and some of the famous individuals he cites as examples of self-actualized people include Abraham Lincoln, Albert Einstein, 27 and Mother Teresa. Practical Applications An effective marketing strategy persuades potential customers to purchase the product or service being offered. One of the most successful ways to achieve this is by appealing directly to one or more of their basic needs. Many business students are taught to use Maslow's hierarchy of needs as a framework to evaluate marketing efforts. The success of a strategy often depends on addressing one of Maslow's identified needs. Maslow's hierarchy continues to serve as the basis for many psychological approaches in marketing. For brands and marketers, Maslow's hierarchy of needs holds two main significances. First, it helps guide how a product or service can fulfill the various needs of the consumer. Second, it influences the communication strategies that brands employ when developing their marketing plans. ------------------------------------------------------------------------------------------------ 28