Marketing Management - Module 1 Notes PDF

MARKETING MANAGEMENT UNIT 1 – INTRODUCTION TO MARKETING FUNDAMENTALS What is Marketing? Marketing is the process of identifying and meeting human and social needs in a way that harmonizes with the goals of the or...

MARKETING MANAGEMENT UNIT 1 – INTRODUCTION TO MARKETING FUNDAMENTALS What is Marketing? Marketing is the process of identifying and meeting human and social needs in a way that harmonizes with the goals of the organization. According to the American Marketing Association, marketing is the activity, set of institutions, and process for creating, communicating, delivering and exchanging offerings that have value for customers, clients, partners, and society at large.  Marketing management is the art and science of choosing targets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value. 2 What is marketed? Goods: Physical goods like bike, smart phone, ice-cream Services: Airlines, hotels, beauty salons, bankers, lawyers, doctors, software Events: Trade shows, performances, sporting events, craft fairs, farmers’ market Experiences: Walt Disney’s Magic Kingdom, Wonderla, SnowWorld Persons: Artists, musicians, sports stars, celebrities, the concept of self-branding Places: Cities, countries are marketed to attract tourists, residents and factories Properties: Real estate/financial property(stocks and bonds)–intangible rights Organizations: To boost their public image.  Information: TV, radio and YouTube channels, newspapers, magazines, organizations supplying information. Ideas: Social marketers, political parties, organizations, promote ideas. Eg. Climate change, civil rights, gender inequality 3 Who is a marketer? A marketer is someone who seeks a response - attention, purchase, a vote, a donation, from another party called the prospect. Marketers are skilled at stimulating demand for their company’s products. There are 8 states of demand: 1. Negative demand – Consumers dislike the product and may even pay a price to avoid using it. Eg. Dental services 2. Non existent demand – Consumers may be unaware or uninterested in the product.  Eg. Certain courses in a college. 3. Latent demand – Consumers may have a need, which is not being fulfilled with an existing product. Eg. Normal phone vs smartphone 4. Declining demand – Consumers begin to buy the product less frequently or not at all. Eg. Pendrive 4 5. Irregular demand – Consumer purchases vary on a seasonal, monthly, daily or even hourly basis. Eg. Rain coat, theme parks, air conditioners 6. Full demand – Consumers are adequately buying all products that are supplied. Eg. Groceries. The challenge for the company is to sustain the demand longer. 7. Overfull demand – More consumers would like to buy the product than, can be supplied. Eg. Cement industry, train tickets in season time, hotel rooms in holiday seasons. 8. Unwholesome demand – Consumers may be attracted to products that have undesirable social consequences. Eg. Illegal drugs, excessive alcohol, pirated movies 5 What is a market? Traditionally, a market is a physical place where buyers and sellers gathered to buy and sell goods. Economists describe a market as a collection of buyers and sellers who negotiate transactions that involve a particular product. There are 5 basic markets: Resource markets Manufacturer markets Consumer markets  Intermediary markets Government markets 6  7 A Simple Marketing System  8 Every nation’s economy consists of interacting sets of markets linked through exchange processes. Marketers view industry as a group of sellers and use the term market to describe customer groups. There are various types of markets: ○ Need market (Eg. Health conscious market) ○ Product market (the home décor market)  ○ Demographic market (the Gen-Alpha market) ○ Geographic market (the Indian market) Demand for a product or service is the base on which a company operates and builds. The financial success of a company depends on the marketing ability. Marketing’s value extends to the society as a whole. Marketing has helped to introduce new products that ease people’s lives. When there is more demand for a product or service, it leads to more jobs, thereby contributing to the nation’s economy. 9 Marketplace – A physical store to shop Marketspace – A digital, online store Metamarkets – A cluster of complementary products and services that are closely related in the minds of consumers, but spread across a diverse set of industries. Metamediaries assist buyers in seamlessly going through these diverse groups.  Eg. Automobile metamarket, Real estate meta market 10 THE NEW MARKETING REALITIES  1 1 THE 4 MAJOR MARKET FORCES Technology The rapid rise of e-commerce, online and mobile communication, and artificial  intelligence has offered marketers increasing capabilities. Globalization Competitors across the globe have an equal opportunity to succeed. The world has become flat eroding all geographic and political barriers. Physical environment Climate change and changes in global health conditions are the two important issues in the current scenario. Climate change can cause changes in agricultural output, and the needs of customers. Health conditions can influence pharma, health care companies and also impact other industries like tourism, food and transportation. Social Responsibility Poverty, pollution, water shortages, climate change, social injustice and wealth concentration are current issues, for which the private sector supports through Corporate Social Responsibility (CSR). 12 THE 3 KEY MARKETING OUTCOMES New Customer Capabilities ○ Online resources as a powerful information and purchasing aid  ○ Search, communicate and purchase through mobile connectivity ○ Actively interact with companies ○ Reject inappropriate/annoying marketing New Company Capabilities ○ Internet is used as a powerful, information and sales channel ○ More information about markets, customers, prospects and competitors ○ Reach consumers more quickly through the social media, mobile marketing ○ Improve purchasing, recruiting and training and cost efficiency New Competitive Environment ○ Deregulation ○ Privatization ○ Retail transformation, Disintermediation (less intermediaries) and Private labels 13 HOLISTIC MARKETING Relationship marketing A key goal of marketing is to develop deep enduring relationships with people and  organizations that directly/ indirectly affect the success of the firm’s marketing activities. Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn and retain their business. The key constituents are customers, employees, marketing partners (channels, suppliers, distributors, dealers, agencies) and members of the financial community ( shareholders, investors, analysts). The ultimate outcome of relationship marketing is a unique company asset called a marketing network, with whom it has built mutually profitable business relationships. Eg. Nike outsources its production to various overseas locations. The Marriot chain provides customer loyalty rewards. https://about.nike.com/en/impact-resources/supplier-relationships 14 Integrated Marketing Integrated marketing coordinates all marketing activities and marketing programs and directs them towards creating, communicating, and delivering consistent value and a consistent message for consumers. The major marketing mix tools are classified into 4 broad groups called as the 4 P’s of  Marketing. Product – To deliver on its value proposition, a firm must create a need-satisfying offering. Products include services, solutions and experiences. Price – The firm decides how much to charge for the offering Place – How to make the offering available to target customers. It includes the brick and mortar stores and also the Internet, mobile channels and media that facilitate digital interaction and delivery Promotion – To engage target customers, communicate about the offering and persuade consumers of the offer’s merits. The firm must blend each of the marketing mix tools into a comprehensive and integrated marketing program that communicates and delivers the intended value to customers.15 Internal Marketing It is the task of hiring, training, and motivating able employees who want to serve customers well. Marketing activities within a company can be even more important than those directed outside the company. Marketing succeeds only when all the departments work together to achieve  customer goals. Internal marketing requires vertical alignment with senior management and horizontal alignment with other departments so that everyone understands, appreciates, and supports the marketing effort. Therefore, apart from employee training, regular internal communication to keep everyone abreast of the company’s actions and appreciate and honour the employees who provide outstanding ideas or service can be more effective. 16 Performance Marketing It requires understanding the financial and non-financial returns to business and society from marketing activities and programs. Marketers need to go beyond the sales revenue and examine the marketing scorecard to interpret the market share, customer loss rate, customer satisfaction and product quality. The legal, ethical, social and environmental effects of the marketing activities and programs need to be studied. Marketers need to justify their investments in terms of building the brand and growing  the customer base, because much of the company’s market value comes from the intangible assets, especially the brand value, the customer base, employees, distributor and supplier relations. Hence, more metrics like brand equity, customer lifetime value, return on marketing investment are employed in performance marketing. 17 Evolution of marketing philosophies The Production Concept Consumers prefer widely available and inexpensive products. Focus is on high production efficiency, low costs and mass distribution Eg. Ford manufacturing cars The Product Concept Consumers prefer products offering the highest quality, best performance or innovative features. But, even a better product will not be successful if it is not properly priced, distributed, advertised and sold.  The Selling Concept Consumers, if left alone will not buy enough of the company’s products. This concept is practiced more with unsought goods (goods that people normally do not think of buying). Companies with overcapacity aim to sell what they make rather than what the market wants. 18 The Marketing Concept Emerged in the mid 1950s It is a customer-centered, ‘sense and respond’ philosophy, instead of ‘make and sell’. The job of marketing is to develop the right products for customers, and not finding the right customer for your product. The key to achieving organization’s goals is being more effective than competitors in creating, delivering, and communicating superior customer value. According to Harvard’s Theodore Levitt, Selling focuses on the needs of the seller; how to convert the product into cash. Marketing focuses on satisfying the needs of the customer by means of the product and the whole cluster of things associated with creating, delivering and consuming it. Reactive market orientation is understanding and meeting customer’s expressed needs, while proactive marketing orientation is on meeting the customer’s latent needs. Both are required for successful marketing and called as total market orientation.19 The Market-Value (Holisitc Marketing) Concept It is based on the development, design and implementation of marketing programs, processes, and activities that recognize their breadth and interdependencies. Traditionally, marketers played the role of an intermediary, understanding customer’s needs and transmitting their voice to various functional areas The market-value concept implies that every functional area should be actively focused on creating value for customers, the company and its collaborators. 20 The Societal Marketing Concept  The idea that a company’s marketing decisions should consider consumers’ wants, the company’s requirements, consumers’ long-run interests, and society’s long-run interests. https://www.thebodyshop.in/our-story  2 1 Core Marketing Concepts Needs - Basic human requirements or states of felt deprivation. ○ Air, food, water, clothing, shelter, recreation, education Wants - When needs are directed to specific objects that might satisfy the need and they are shaped by culture and personality. ○ Food is a need, but when it is specific like briyani / pizza, it is a want Demand – Wants for specific products backed by an ability to pay (buying power) ○ Everyone might desire a Rolls Royce car, but only a few can afford to pay There are 5 types of needs:  ○ Stated needs – ( Ravi wants an inexpensive car) ○ Real needs – ( He wants the operating cost, not the initial cost, to be low) ○ Unstated needs – (Ravi expects good service from the dealer) ○ Delight needs – (He would like the onboard navigation system to be included) ○ Secret needs – (Ravi wants his friends to see him as a savvy consumer) 22 A marketer cannot satisfy everyone. Marketers divide the market into segments. This is done by identifying and profiling distinct groups of buyers, by examining the demographic, psychographic and behavioural differences among buyers. Target market – After identifying the market segments, the marketer decides which segment presents the greatest opportunity. This particular segment becomes his target market. Market offering – For the specific target market, the marketer develops an offering, a combination of products, services, information and experiences, that it positions in the minds of target buyers as delivering some central benefits. Value proposition – A set of benefits that the marketer offers to customers to satisfy their needs. This intangible value is made physical through the offering. Brand – An offering from a known source, with a specific identity or symbol. 23 Customer –perceived value – The customer’s evaluation of the difference between the benefits delivered by, and the costs of obtaining and using a market offering, relative to those of competing offerings. Satisfaction – It reflects a person’s judgments of a product’s perceived performance in relation to their expectations. If it falls short, then they are dissatisfied. Customer satisfaction – The sense of pleasure a buyer feels when a product’s perceived performance matches or exceeds their expectations. Customer-engagement marketing – Making the brand a meaningful part of customers’ conversations and lives by fostering direct and continuous customer involvement in shaping brand conversations. Customer brand advocacy – Actions by which satisfied customers initiate favorable interactions with others about a brand. Greater customer empowerment means that companies rely on marketing by  attraction than on marketing by intrusion. 24 Customer generated marketing – Brand exchanges created by customers themselves both invited and uninvited- by which customers play a role in shaping their own brand experiences and those of other customers. Eg. Customers-to-customer exchanges in social media, blogs, online review sites and other digital forms. Customer brand engagement – whether invited by marketers or not – will be an important marketing force. To reach the customer, the marketer uses 3 kinds of marketing channels: Communication channels – Deliver and receive messages from target buyers. Eg. Newspapers, social media, the Internet. The look of the store/website communicates to the customer. Dialogue channels like emails, toll-free numbers, and chatbots are available to interact with the customer. Distribution channels – To display, sell or deliver the products to the customer. Eg. Distributors, wholesalers, retailers and agents.  Service channels – Facilitators for the business like banks, insurance agencies, transportation companies, warehouses. 25 Supply Chain The supply chain stretches from the raw material to the final product that the customer buys. Every company captures only a percentage of the total value generated by the supply chain’s value delivery system. When a company acquires its competitors or expands upstream or downstream, its aim is to capture a higher percentage of supply chain value. Partner relationship management refers to working closely with partners in other company departments and outside the company to jointly bring greater value to customers. Competition It includes all the actual and potential rival offerings and substitutes a buyer might consider. A customer could probably buy his product from any of the competitors or may purchase substitute products too. 26  Marketing Environment There are 2 types : Task environment and the Broad environment. Task Environment The company Suppliers ○ Material suppliers ○ Service Suppliers Marketing research agencies Advertising agencies Banking & insurance agencies Transportation companies Telecommunication companies Distributors & Dealers ○ Agents ○ Brokers The target customers.  27 Broad environment Demographic environment Economic environment Physical environment Technological environment Political-legal environment Socio-cultural environment. 28 Customer lifetime value The value of the entire stream of purchases a customer makes over a lifetime of  patronage. Good customer relationship management creates customer satisfaction. Satisfied customers remain loyal and also speak favorably to others about it. When their expectations are high and it is not met, loyalty comes down. Hence, the aim of CRM is not only customer satisfaction but also customer delight (exceeding expectations). Customer equity The total combined customer lifetime values of all the company’s customers. Eg. Hybrid cars among the younger age group of people Vs the older people 29 Building the Right Relationships with the Right Customers Customers can be classified according to their potential profitability. Strangers – Don’t invest anything in them. Try to make money on every transaction.  Butterflies – Eg. Stock market investors. Enjoy the butterflies for the moment. True Friends – Make continuous relationship investments to engage and delight them. Barnacles – Most problematic. Absorb time but not less profitable. Can sell more, raise fees or reduce service. If not profitable then, fire. 30  31 Marketing Environment Internet of Things (IoT) A global environment where everything and everyone is digitally connected to everything and everyone else. Digital and social media marketing – Using digital marketing tools such as websites, social media, mobile apps, email, blogs to engage customers through their digital  devices. Big Data and Artificial Intelligence Marketers can now amass huge data from sources like customer transactions to real time data flowing from websites and social media monitoring, smartphones, connected IoT devices. Brands use this big data to gain deeper customer insights, personalize marketing offers and improve customer engagement and service. Customer service chatbots and virtual assistants too have emerged. Globalization – Marketers are taking a global view of the company’s industry, competitors and opportunities. 32 The Expanded Marketing Process Model 33 THANK YOU !! 34