Fundamental Of Marketing For OrientationPresentation Transcript
M C Rashid Khan
Orientation Program for MBA Students
Fundamental of Marketing Management
“ Financial success often depends on Marketing ability . Finance , operation accounting and other business functions will not really matter if there is not sufficient demand for products and services.” -Philip Kotler
“ Marketing is the only function that brings revenues into the organization. All other management function incur costs”
Marketing Management – “Art & science of choosing target markets and building profitable relationships with them”. Involves getting, keeping & growing customers through creating, delivering and communicating superior customer value.
Increase sales volume
Increase growth rate
Increase market share
Increase market penetration
Maximize return on investment
Promote positive company image
Promote social responsibility
Hire Ad agency
Plan Ad campaign
Design Company logo
Get Broacher made
Train the sales force
Retain a high powered public relation firm
Alter or reposition the company’s image
Identify groups of potential customer and find out ways to convince them to buy the company’s product
Serve the real need of the customers
It is expression of the Co’s character
Provide desired value to the customers
What is a market?
The place where buyers and sellers gather for transactions which involves the exchange of goods and services.
Marketing is the process of finding customer needs and serving those needs profitably.
If an organization is obsessed with looking for profits , it will never find them .
But if it is focused on satisfying its customers , profit will come automatically.
Profit is an outcome of serving needs well.
New customers are expensive than old
Customers are the most powerful stake holder of any company
Customer interest should be paramount
In Marketing customers needs are discovered and organization serve those needs truthfully
Marketing department is the main source of knowledge about customers
Definition of marketing
“ The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchange that satisfy individual and organizational goals”. AMA
It is delivery of standard of living to society. (Mazur, 1947)
It is a total system of interacting business activities designed to plan , price , promote and distribute want satisfying goods and services to present potential customers.( Stanton , 1971)
Definition of marketing
Marketing is the economic process by which goods and services are exchanged between the producer and the consumers and their value determined in terms of money prices.
Marketing is the function that adjusts the organization’s offering to the changing needs of the market place.
Marketing originates with the recognition of a need on the part of a consumer and terminate with the satisfaction of that need by the delivery of a useable product at the right time , at the right place and at an acceptable price
Marketing is the delivery of standard of living to society
Marketing In the New Economy
What is new economy?
A substantial increase in purchasing power.
A greater variety of available goods and services.
A great amount of information about everything.
A great ease in interacting and placing orders.
An ability to compare notes on products and services.
Designing Additional features for a new product
Hiring a required number of sales persons
Deciding how much to spend on Advertising
Exact wording or color for new packaging
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We use Marketing
Slow growth of the products
Increasing buyers patterns
Increasing marketing expenditure
Changing Taste of the consumers
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Functio nal aspects of Marketing
It helps in
Determination of Price
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What can be Marketed
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Marketing people are involved in 10 types of entities:
Goods like eggs, steel, cars (Maruti!!!! Wow)
Services like airlines, hotels, barbers
Experiences like Walt Disney world’s magic kingdom, at planet Hollywood
Events like Olympics, trade shows, sports events
Persons like celebrity marketing by making major film star as brand ambassador et
Places like cities, states, nations to attract tourists, like we use TAJ or say Nainital
Properties like real state owners market properties or agent markets securities
Organizations thru’ Corporate identity ads like by using tag line ‘Lets make things better’, or like Richard Branson (virgin) or Phil knight of Nike are some identity
Information like thru encyclopedias, CDs and visit the internet for information.
Ideas like the buyer of a drill are really buying a hole. Consultancies
Goods VS Service
A good is a physical entity i.e. it is a tangible product which can be touched and feel.
CD_ROM of encyclopedia , a shirt , or a bar of chocolate are example of goods
A service is created when human efforts are clubbed with mechanical efforts to provide intangible benefits to the customers; it gives some value to the recipient, e.g.. Health care , laundry, transportation , banking etc
Company Orientations Towards the Market place
Production Concept :Consumers prefer products that are
widely available and inexpensive
Product Concept: Consumers favor products that offer the most quality, performance, or innovative features
Selling Concept : Consumers will buy products only if the company aggressively promotes or sells these products
Marketing Concept: Focuses on needs/wants of target markets & delivering value better than competitors
Societal Marketing : Focuses on needs/ wants of target markets & delivering value better than competitors that preserves the consumer’s and society’s well-being
Core Marketing Concept
Customer value and satisfaction
Value & Satisfaction: Customer value – Difference
between the values the customer gains from owning & using a product & the costs of obtaining the product.
Customer satisfaction – With a purchase, how well the product’s performance lives up to the customer’s expectations. Customers expectations must be set at the right level of expectations, neither too low or too high.
Need , wants and demand
Needs are the basic human requirements. People need food, air, water, clothing & shelter to survive. People also have needs for recreation, education and entertainment. “Needs Pre-exists” (can’t be created).
The needs become wants when they are directed to specific product/ services that might satisfy the needs.
Eg: while shopping a thirsty and tired customer may need water . But he sits down in a coffee shop orders for bottled water and a cup of coffee. The thirst needs here becomes a want for coffee and bottled water.
When a want is accompanied by consumers ability to pay its become a demand .
Eg: Mercedes , Toyota Lexus , Mont Blank pen.
Today the challenge for marketer is that of converting needs to wants to demands.
Exchange – It is one of the core concepts of marketing. It is the process of obtaining a desired product from someone by offering something in return. There are five conditions that needs to be satisfied:
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 & delivery
Each party is free to accept or reject the exchange offer
Each party believes it is appropriate or desirable to deal with the other party
A transaction is a trade of values between two or more parties. It involves two things:
A time of agreement
A place of agreement
Demand states and marketing tasks
Marketing management has the task of influencing the level, timings and composition of demand in a way that will help the organization to achieve its objectives.
The market is in a state of negative demand if; a major part of the market dislikes the product and may even pay a price to avoid it.
Eg: People have a negative demand for
Gall bladder operation
Employers feel a negative demand for
The marketing task is to analyze, why the market dislikes the products and to find out whether a marketing program consisting of product redesign , price reduction and more positive promotion could change the customers beliefs and attitude.
Target consumers may be uninterested in the product.
Eg: *Farmers may not be interested in new farming methods
*College students may not be interested in a foreign language course.
The marketing task is to find ways to connect the benefits of the products to the person’s natural needs and interests .
Many consumers may share a strong need that cannot be satisfied by any existing products.
Eg: *Latent demand for harmless cigarettes.
*More fuel efficient cars.
The marketing task is to measure the size of the potential market and develop effective goods and services that would satisfy the demand
A substantial drop in the demand for products.
The marketing task is to:
i. Analyze the cause of market decline.
ii. Determine whether the demand can be re-stimulated by changing target markets, changing product features and developing more effective communication.
Iii. Reverse the declining demand through creative remarketing of the product.
Example: a hotel in a hill station faced with an irregular demand. …excessive during the peak season and hardly any occupancy during off-season. Marketing task is to promote the hotel during the laen season by offering discount on room and food tariff, organizing special events to attract tourists , promoting it as a conference venue.
Organizations face demand that varies on a seasonal, daily or even hourly basis, causing problems of idle capacity or overcrowded capacity.
Eg: *Markets :- visited on weekends, not on weekdays.
Eg. Museums are deserted during week days and over crowded during week ends.
* Holiday resorts are visited more frequently during summer and are idle in other season.
* Hospitals :- OT’s booked for early weak
The marketing task is called Synchromarketing (alter pricing, promotion & other incentives)
Organizations face full demand when they are pleased with there volume of business.
The marketing is to:
i. Maintain the current level of demand in the face of changing consumer preferences and increasing competition.
ii. Quality should be improved.
iii. Continuously measure consumer satisfaction.
Eg: Maruti at the time of bookings made open.
Some organizations face a demand level that is higher than they can or want to handle.
Marketing task is De-marketing which requires finding ways to reduce the demand temporarily or permanently.
Steps involved in de-marketing:
i. Raising prices.
ii. Reducing promotion and service .
iii. Selective de-marketing(less profitable markets)
Eg: Quota system for new car registration by a fixed percentage annually.
Eg: an oil company is faced with an ever increasing demand. The marketer here has to de-market oil by educating motorist on the importance of conservation of oil.
Objectionable products will attract organized effort to discourage their consumption.
Un-selling campaigns have been conducted against cigarettes, alcohols, hard drugs, handguns and pirated movies.
The marketing task is to:
i. Use fear communication.
ii. Price hike.
iii. Reduced availability.
The extent to which a product satisfies customer needs and wants is called utility.
Marketers can provide four types of utility to their target customers :
and possession utility.
Form utility: is created when raw material is converted into a finished product.
Example : Britannia Industries converts wheat, sugar and other ingredients into biscuits and cookies and provides form utility to its customers.
Time utility is providing the products when the customers want them.
Example, Automated Teller Machines (ATMs) installed by banks provide customers access to banking services around the clock.
Place utility : is provided when a marketer provides the product at locations preferred by the customer.
Domino’s Pizza delivered at your doorstep, is an example of place utility. Dell , Amazon.com etc
Possession utility allows a buyer to use the product as he wishes. It is the value that a buyer obtains from the product.
For example, a customer who has purchased a car may use it for whatever purpose he desires. He may use it to commute to and from his office, or go on vacation with his family, or even rent it out as a taxi.
Sales VS Marketing
Selling is pre occupied all the time with the needs of seller
Emphasizes on saleable surpluses available with the corporation
Seeks to quickly convert products into cash
Marketing focuses on the needs of buyers
Emphasizes on identification of market opportunity
Seek to cover customers needs into products
Sales VS Marketing
Has Concern for itself with the tricks and techniques
View business as a goods producing process
No care for the value satisfactions
Focus on fulfilling the needs of the customers
Views business as customer satisfying process
Primarily care for the value satisfaction
Sales VS Marketing
The firm makes the product first and then figures out how to sell it and make profits
Emphasizes on staying with the existing technology and reducing the cost of production
Product is the consequence of the marketing efforts
Emphasizes on innovation in every sphere ; on providing better value to the customers by adopting the most innovative technology
Sales VS Marketing
Costs determine price
Transportation , storage and other distribution functions are perceived as mere extensions of the production function
Selling views the customers as the last link in the business
Consumer determine price; price determine costs
They are seen as vital services to be provided to the customer , keeping customers’ convenience in focus
Marketing vies the customers as the very purpose of the business; sees business from the point of view of the customers
Marketing and Selling Orientations Orientation/ Concept Focus Means Ends Selling Product Aggressive selling and sales promotion with emphasis on price variations to close the sale. “ I must somehow hook the customer .” Maximise profits through sales maximization Marketing Customer Integrated marketing plan encompassing product, price, promotion and distribution backed up by adequate environmental scanning, consumer research and opportunity analysis—emphasis on service " what can we do that will make us better than and superior to our competitors, in the customer's eyes "? Maximise profits through increased consumer satisfaction and hence higher market share.
Company strive to serve with new products and services
Focus on cost
Try to attain economy of scale
Minimize production costs
Customer needs Potential Market opportunities Marketing product And services Customer Production Capabilities Manufacture Products Customer Aggressive sales efforts Marketing concept Production concept
Myopia means short-sightedness.
Industries fail not because markets are saturated but because of the failure and short-sightedness of the management.
Example: Pager companies could not foresee technology changes and changing customer expectations and adapt themselves to fulfill customer expectations while mobile companies fulfilled the needs and succeeded in the market.
Similarly, when small cars were introduced in the US market by the Japanese companies, they became a hit in the first year of their introduction.
None of the US research found out what exactly the customers wanted. They focused on what was the best alternative available for a customer . The researches focused on the product, not on customer requirements.
Customer buy service not product
Customer buys a car , he is buying the service of transportation
Customer buys an AC , he is buying cool atmosphere
Marketer should adopt a service model of market instead of selling the title to the product
This model can easily be applied in business like automobiles, carpeting, furnishing and for most of the consumer durable items
Marketing as a Managerial Function
Understanding consumer needs
Environmental scanning and market opportunity analysis
Development of competitive marketing plan and strategy such that an organisation is able to satisfy not only the consumer needs but also achieve its objectives
Implementation of marketing plan and development of tactical plans to overcome problems at the market place; and
Development of control mechanisms.
Marketing Mix is particular combination of the products , its price , the method to promote it and the ways to make the product available to the customers
Based upon its understanding of customers a company develop its marketing mix of product , price , place and promotion
Managers must manage these 4p’s in a way that they satisfy customers needs better than the competitors
Product decision involves deciding what goods or services should be offered to customers
The products or services serves the basic needs of the customers
It provides the primary value to the customers
As technologies and tastes changes product become out of date and inferior to the competition
Company must replace them with new designs and features that customers value
Price is the cost that customer is willing to bear for the product
Payment period and credit terms also affect the real price received in any transaction
Change in price can damage customer perceptions about the value of the product
If price is reduced customers may start regarding it as an inferior quality product
Higher price may also bring negative impact
Decisions have to be made with respect to promotion mix , advertising , personal selling , sales Promotion, exhibition, sponsorship and public relations
By these means the target audience is made aware of the existence of product and the benefits that it confers to customers
Example: an expensive product like machinery with limited number of customers should be promoted through personal contacts between the buyers and sales persons
Customers requires information to be able to make a choice
Product bought by the mass market can be advertised on the mass media
A customer does not buy a product unless he has formed certain expectations about the product
Promotions shapes the expectations of customers about the products
Extra hype can increase the expectation of customer and will be disappointed
It involves decisions concerning distribution channels to be used
Location of outlets
Method of transportation
Inventory level to be held
Product should be available in right quantity at right time and place
Independent intermediaries , such as retailers , wholesales and distributors through which goods passed onto the customers
They provide cost effective access to the market place
Company can not manage them efficiently
Company has to manage and structure good relationship with intermediaries
Function of distribution channel
Transfer product from manufacturer to the customers
Pass information from manufacturer to the customers
Retrieve payments from the customers to the manufacturers
Segmentation is the process of clubbing together similar customers in a group so that they can continue to segments its market into smaller and more homogeneous (same) groups.
It can be used as a vehicle for entering a market.
A company may not have the resources and the capabilities to serve all the segments
It may decide to serve one or more segment depending upon its capabilities and resources
The segment that a company chooses to serve is called target market
Positioning is the process of creating a distinct offer and communicating it to the customers
The process of positioning is continuous in nature and it should always be proactive because new needs and competitors keep cropping up.
When you exceed customer expectations
The AMA definition of a brand:
“ A name, term, sign, symbol, or design, or a combination of these, intended to identify the goods or services of one seller or group of sellers and to differentiate them from the competition.”
What Is a Product ?
A product is any offering by a company to a market that serves to satisfy customer needs and wants.
It can be an object, service, idea, etc
Product vs. Brand A product is something that is made in a factory A brand is something that is bought by a customer. A product can be copied by a competitor. A brand is unique. A product can be quickly outdated. A successful brand is timeless.
BMW Best engineered
Coke Fun and excitement
Marketing To Non-Profit & Social Causes
Preservation of environment.
Acceptance of a girl child as equal to that of a male child.
Avoid usage of plastics which are likely to damage environment
Avoid or discontinue risky practices like, smoking, drug abuse, or unsafe sex
Assist police in controlling the crime in neighbourhood etc.
Cause marketing, involves careful planning and preparation
. Negotiating partnership with several other players which includes intermediaries, also develop a strong communication program and finally monetary measuring and evaluating programs for any correspondence .
A good cause can thus help build a strong brand image, facilitate market entry and counter all negative criticism.
Cause marketing can also help create or change public policy
A free society needs both high standards of individual wealth and clean environment
Company should not be allowed to pollute the environment
It should reduce the emissions or make them harmless before releasing into environment
Help of technology should be taken
Customers should stop buying the product of the companies which are polluting the environment
A company can be extremely efficient and yet be remarkably unsuccessful because it is not producing what customer wants to buy
“ Marketing is a process of satisfying customer’s demand for a product or service or solution beyond his / her expectations , taking into account customer value or value addition to customer and social responsibility as compared with a competitor.”
-- Dr. P. L. Maggu
Marketers attempt to reduce the demand for a product when the demand for the product is greater than the manufacturer's ability to produce it.
Demarketing strategies involve raising prices, reducing advertising or promotion activities, or eliminating product benefits.
Demarketing does not aim to destroy the demand but only to lower it to make it level with the ability to produce the product.
Eg: An oil company is faced with an ever increasing demand. The marketer here has to de-market oil by educating motorist on the importance of conservation of oil.
“ When a new product in being marketed and existing old product is being demarketed using a company’s goodwill for the old product in introducing the new one by withdrawing the old product at the same moment.” Dr. P. L. Maggu
This type of situation has been designated as the concept of dual marketing.
The business situation in which the concept of dual marketing can be visualized for example:
A business situation in which a company uses its brand name to introduce a new product in place of the existing product or a substitute product by withdrawing it from the market on account of the following reasons:
The company is fearful to compete in the growing global competitive situation in the near future for want of maintaining the desired price of the quality product at the expected reduced price of the product in the global market.
The company is considering to introduce a new product or substitute product in view of changing technology of fashion in place of existing product of the company in the market.
The company is considering diversification in collaboration with a foreign company.
The company is considering to increase the cost of existing product by changing its pattern and design to attract global market customers.
The company is thinking to replace the existing product on account of a fearful situation to arise in near future on account of the indication showing shortage of raw material being used in existing product as per the government changed business policies.
“ When a company markets a product as a major product and introduces a new product as a minor product the cost of which may be included in the major product and further the minor product is not being produced by any other competitor . Minor product is just a sample product which after some time may be inducted as a major product . This situation has been designated here as Bi-Marketing.” Dr. P. L. Maggu
Example: A business situation in which a company is introducing a gift product along with the major (main) product.