Marketing management is ―the art and science of choosing target markets and building
profitable relationships with them.
Marketing is to identify the need of customer and providing them
accordingly to satisfy them.
Marketing is a societal process by which individuals and groups
obtain what they need and want through creating, offering, and freely
exchanging products and services of value with others.
- Philip Kotler
Needs ,Wants and Demands
The marketer must try to understand the target market’s needs, wants and demands.
Needs are the basic human requirements. People need food, air, water, clothing and
shelter to survive. People also have strong needs for education, recreation and other
services. These needs are not created by society or by marketers. They exist in the very
texture of human biology and the human condition.
These needs become wants when they are directed to specific objects that might satisfy
the given need. A country (sri lanka, us) need food but wants a rice and curry, noodles
etc. although people’s need are few ,their wants are shaped and reshaped by social
forces and institutions including families, temples ,schools and business organizations.
The Micro environment
Company’s Internal Environment-
functional areas such as top
management, finance, and manufacturing, etc.
Suppliers - provide the resources needed to produce goods and services.
Marketing Intermediaries distribute its goods to final buyers.
help the company to promote, sell, and
five types of markets that purchase a company’s goods and
those who serve a target market with similar products and
any group that perceives itself having an interest in a company’s
ability to achieve its objectives.
The Macro environment
Economic - factors that affect consumer buying power and patterns.
monitors population in terms of age, sex, race, occupation,
location and other statistics.
natural resources needed as inputs by marketers or that are
affected by marketing activities.
Technological - forces that create new product and market opportunities.
Political - laws, agencies and groups that influence or limit marketing actions.
Cultural - forces that affect a society’s basic values, perceptions, preferences,
Value chain And Value delivery process
Marketing involves satisfying consumers' needs and wants.
The task of any business is to deliver customer value at a profit.
In a hypercompetitive economy with increasingly rational buyers faced with
abundant choices, a company can win only by fine-tuning the value delivery
process and choosing, providing, and communicating superior value.
The traditional view of marketing is that the firm makes something and then sells
it. In this view, marketing takes place in the second half of the process.
The company knows what to make and the market will buy enough units to
produce profits. Companies that subscribe to this view have the best chance of
succeeding in economies marked by goods shortages where consumers are not
fussy about quality, features, or style—for example, with basic staple goods in
The Value Chain
Michael Porter of Harvard has proposed the value chain as a tool for identifying ways to
create more customer value.
According to this model, every firm has combination of activities performed to design,
produce, market, deliver, and support its product.
The value chain identifies nine strategically relevant activities that create value and cost
in a specific business.
These nine value-creating activities consist of five primary activities and four support
The primary activities cover the sequence of:
1) Bringing materials into the business (inbound logistics),
2) Converting them into final products (operations),
3) Shipping out final products (outbound logistics),
4) Marketing them (marketing and sales), and
5) Servicing them (service).
The support activities:
1) Technology development,
2) Human resource management,
3) Firm infrastructure—are handled in certain specialized departments, as well as
4) Procurement and hiring
The value delivery process
The traditional view of the business process, however, will not work in economies
where people face abundant choices.
The smart competitor must design and deliver offerings for well-defined target
This belief is at the core of the new view of business processes, which places marketing
at the beginning of planning.
The Japanese have further refined this view with the following concepts:
Zero customer feedback time. Customer feedback should be collected
continuously after purchase to learn how to improve the product and its
Zero product improvement time. The company should evaluate all
improvement ideas and introduce the most valued and feasible improvements as
soon as possible.
Zero purchasing time. The company should receive the required parts and
supplies continuously through just-in-time arrangements with suppliers. By
lowering its inventories, the company can reduce its costs.
Zero setup time. The company should be able to manufacture any of its
products as soon as they are ordered, without facing high setup time or costs.
Zero defects. The products should be of high quality and free of flaws.
Holistic marketing sees itself as integrating the value exploration, value creation, and
value delivery activities with the purpose of building long-term, mutually satisfying
relationships and co prosperity among key stakeholders.
A Holistic Marketing Orientation And Customer Value
The holistic marketing framework is designed to address three key management
1. Value exploration - How can a company identify new value opportunities?
2. Value creation- flow can a company efficiently create more promising new value
3. Value delivery- How can a company use its capabilities and infrastructure to deliver
the new value offerings more efficiently?
VALUE EXPLORATION Because value flows within and across markets that are
themselves dynamic and competitive, companies need a well-defined strategy for value
exploration. Developing such a strategy requires an understanding of the relationships
and interactions among three spaces:
(1) The customer's cognitive space;
(2) The company's competence space; and
(3) The collaborator's resource space. The customer's cognitive space reflects existing
and latent needs and includes dimensions such as the need for participation, stability,
freedom, and change.
To exploit a value opportunity, the company needs value-creation skills.
Marketers need to:
1) identify new customer benefits from the customer's view;
2) utilize core competencies from its business domain; and
3) select and manage business partners from its collaborative networks.
To craft new customer benefits, marketers must understand what the customer
thinks about, wants, does, and worries about.
Marketers must also observe who customers admire, who they interact with, and
who influences them.
Delivering value often means substantial investment in infrastructure and
The company must become proficient at customer relationship management,
internal resource management, and business partnership management.
Customer relationship management fallows the company to discover who its
customers are, how they behave, and what they need or want.
It also enables the company to respond appropriately, coherently, and quickly to
different customer opportunities.
Marketing Research and Information Systems
Marketing Information System
Consists of people, equipment, and procedures to gather, sort, analyze, evaluate and
distribute needed, timely, and accurate information to marketing decision makers.
The Marketing Information System
Marketing Decisions and Communications
Marketing Information System
Designing an MIS
1) Identification of required Information
2) Classification the requirements of information
3) Evaluating the cost
4) Compare Cost vs. Benefits
5) Determining the frequency and timing of Collection of the information
6) Identification of Sources of information
7) Designing the mechanism/ procedures
8) Analyzing & interpreting
9) Monitoring, Maintaining, reviewing and improving the system.
1- Internal Records System
This system records reports on orders, sales prices, Inventory levels, receivables,
Payables and so on. By analyzing this information , marketing managers can spot
important opportunities and problems.
2- Marketing Intelligence System
A Marketing Intelligence System is a set of Procedures and sources managers use
to obtain everyday information about developments in the Marketing Environment.
Steps for Improvement
To train & motivate the sales force to spot and report new developments.
Motivate distributors, retailers, and other intermediaries to pass along important
Set up a Customer advisory Panel
Take advantage of Government data resources
Purchase Information from outsider Suppliers
Use Online customer feedback system to collect Competitive Intelligence
3- Decision Support System
DDS are integrated systems including hardware, communication network,
databases, model base, software base, and the DSS user (decision maker) that
collect and interpret information for decision making.
Features Of MIS : Scientifically Collection of Information
Determine the required Data
Use of Computer System
It is a Continuous Process
It creates Coordination
Functions of a MIS:
Assessing Information Needs
Conduct Interviews and Determine
What Information is
Desired, Needed, and Feasible to Obtain.
Monitors Environment for
Examine Cost/ Benefit of
Functions of a MIS:
Obtains Needed Information for Marketing Managers
From the Following Sources
Collection of Information from Data Sources Within the Company
From: Accounting, Sales Force, Marketing, Manufacturing, Sales
Collection and Analysis of Publicly Available Information about
Competitors and the Marketing Environment
From: Employees, Suppliers, Customers,
Competitors, Marketing Research Companies
Design, Collection, Analysis, and Reporting of Data about a Situation
Functions of a MIS:
Information Must be Distributed
to the Right Managers at the Right Time.
Distributes Non routine
Information for Special
MR is the systematic and objective identification, collection, analysis, dissemination,
and use of information for the purpose of improving decision making related to the
identification and solution of problem and opportunities in marketing.
The Marketing Research Process
Marketing Research Process
Step 2. Develop the Research Plan
Determine the Specific Information Needed
Information that has
Both Must Be:
for the specific purpose
Primary Data Collection Process
Step 1. Research Approaches
Gathering data by observing people,
actions and situations
Asking individuals about
attitudes, preferences or
Using groups of people to
Step 2. Contact Methods
Step 3. Developing a Sampling Plan
Step 4. Research Instruments
Implementing the Research Plan
Interpreting and Reporting Findings
Developing Marketing Strategies and Plans
A strategy is a theory about how to gain competitive advantages. A good strategy is a
strategy that actually generates such advantages.
Strategic management is the process of specifying an organizations objectives,
developing policies and plans to achieve these objectives, and allocating resources so
as to implement the plans.
Strategic planning is the managerial process that helps to develop a strategic and
viable fit between the firm’s objectives, skills, resources with the market
It helps the firm deliver its targeted profits and growth through its businesses and
Strategic Planning calls for Action in three key areas
Managing a company's businesses as an investment portfolio.
Assessing each business's strength by considering the market's growth
rate and the company's position and fit in that market.
Establishing a strategy For each business.
To understand marketing management, we must understand strategic planning.
Most large companies consist of four organizational levels:
1. The corporate level- Corporate headquarters is responsible for designing a
corporate strategic plan to guide the whole enterprise; it makes decisions on the
amount of resources to allocate to each division, as well as on which businesses
to start or eliminate.
2. The division level- Each division establishes a plan covering the allocation of
funds to each business unit within the division.
3. The business unit level- Each business unit develops a strategic plan to carry
that business unit into a profitable future.
4. The product level- Finally, each product level (product line, brand) within a
business unit develops a marketing plan for achieving its objectives in its product
Levels of Goals/Plans & Their Importance
Strategic Goals and Plans
Where the organization wants to be in the future
Pertain to the organization as a whole
Action Steps used to attain strategic goals
Blueprint that defines the organizational activities and resource allocations
Tends to be long term
A marketing plan is the central instrument for directing and
coordinating the marketing effort. It operates at a strategic and
Levels of a Marketing Plan
Planning, implementation, and control cycle
To be successful, a firm also needs to look for competitive advantages beyond its own
operations, into the value chains of suppliers, distributors, and customers. To carry out
its core business processes, a company needs resources.
In the past companies controlled most of the resources Many companies today have
partnered with specific suppliers and distributors to create a superior value delivery
network also called a supply chain.
To carry out its core business processes, a company needs resources—labor power,
materials, machines, information, and energy.
Traditionally, companies owned and controlled most of the resources that entered their
businesses, but this situation is changing. Many companies today outsource less critical
resources if they can be obtained at better quality or lower cost.
Frequently, outsourced resources include cleaning services, landscaping, and auto fleet
management. Kodak even turned over the management of its data processing
department to IBM.
Corporate and Division Strategic Planning
1. Defining the corporate mission
2. Defining the business
3. Assessing growth opportunities
4. Organization and organizational culture
1. Defining the corporate missionThis seeks to embody the entire goals of the organization and the objective of its
existence. It seeks to provide a sense of purpose, direction and opportunity.
According to Peter Drucker, it is time to ask some fundamental questions.
What is our business?
Who is the customer?
What is of value to the customer?
What will our business be?
What should our business be?
Successful companies continuously raise these questions and answer them
thoughtfully and thoroughly.
Organizations develop mission statements to share with managers, employees, and
(in many cases) customers. A clear, thoughtful mission statement provides
employees with a shared sense of purpose, direction, and opportunity. The
statement guides geographically dispersed employees to work independently and
yet collectively toward realizing the organization's goals.
Good mission Statements
1. Mission statements are at their best when they reflect a vision, an almost
"impossible dream" that provides a direction for the company for the next 10 to
2. Focus on a limited number of goals- The statement, "We want to produce the
highest-quality products, offer the most service, achieve the widest distribution,
and sell at the lowest prices" claims too much.
3. Stress the company's major policies and values.
4. Define the major competitive spheres within which the company will operate
Major Competitive Spheres
Vertical channels (Ford)
Eg.- Fred Smith wanted to deliver mail anywhere in the United States before 10:30
A.M. the next day, so he created FedEx.
Eg- Rubbermaid Commercial Products, Inc.
―Our vision is to be the Global Market Share Leader in each of the markets we
serve. We will earn this leadership position by providing to our distributor and enduser customers innovative, high-quality, cost- effective and environmentally
responsible products. We will add value to these products by providing legendary
through our Uncompromising Commitment
―The purpose of Motorola is to honorably serve the needs of the community by
providing products and services of superior quality at a fair price to our customers; to
do this so as to earn an adequate profit which is required for the total enterprise to
grow; and by doing so, provide the opportunity for our employees and shareholders
to achieve their personal objectives.‖
―We help people trade anything on earth. We will continue to enhance the online
trading experiences of all—collectors,
dealers, small businesses, unique item
seekers, bargain hunters, opportunity sellers, and browsers.‖
Defining the Business
Companies often define their businesses in terms of products: They are in the "auto
business" or the "clothing business."
A business must be viewed as a customer-satisfying process, not a goods-producing
Transportation is a need: the horse and carriage, the automobile, the railroad, the
airline, and the truck are products that meet that need.
Dimensions that Define a Business
Product Orientation vs. Market Orientation
We run a railroad
We are a people-and-goods
We make copying equipment We
We sell gasoline
We supply energy
We make movies
We entertain people
Strategic Business Units
The purpose of identifying the company's strategic business units is to develop separate
strategies and assign appropriate funding. SBU has three characteristics
It is a single business or collection of related businesses that can be planned
separately from the rest of the company.
It has its own set of competitors.
It has a manager who is responsible for strategic planning and profit performance
and who controls most of the factors affecting profit.
Assessing Growth Opportunities
Planning new businesses,
Terminating older businesses.
Downsizing and Divesting Older Business
Ansoff Growth Matrix
1- Market-penetration strategy- The company first considers whether it could
gain more market share with its current products in their current markets.
2- Market-development strategy- The company considers whether it can find
or develop new markets for its current products.
3- Product-development strategy-
The company considers whether it can
develop new products of potential interest to its current markets.
4- Diversification strategy - The company will also review opportunities to
develop new products for new markets.
Types of Diversification
Acquiring or developing new products or offering new services that could appeal to the
company´s current customer groups. In this case the company relies on sales and
technological relations to the existing product lines. For example a dairy, producing
cheese adds a new type of cheese to its products.
Occurs when the company goes back to previous stages of its production cycle or
moves forward to subsequent stages of the same cycle - production of raw materials or
distribution of the final product. For example, if you have a company that does
reconstruction of houses and offices and you start selling paints and other construction
materials for use in this business. This kind of diversification may also guarantee a
regular supply of materials with better quality and lower prices.
Enlarging the production portfolio by adding new products with the aim of fully utilizing
the potential of the existing technologies and marketing system. The concentric
diversification can be a lot more financially efficient as a strategy, since the business
may benefit from some synergies in this diversification model. It may enforce some
investments related to modernizing or upgrading the existing processes or systems.
This type of diversification is often used by small producers of consumer goods, e.g. a
bakery starts producing pastries or dough products.
Heterogeneous (conglomerate) diversification
Is moving to new products or services that have no technological or commercial relation
with current products, equipment, distribution channels, but which may appeal to new
groups of customers. The major motive behind this kind of diversification is the high
return on investments in the new industry. Furthermore, the decision to go for this kind
of diversification can lead to additional opportunities indirectly related to further
developing the main company business - access to new technologies, opportunities for
strategic partnerships, etc.
Four market-product strategies: alternative ways to expand sales revenues for
Ben & Jerry’s
Success Probability for each of the 4 basic strategies:
Diversification strategy 1 in 20
Market-development Strategy is 1 in 4
Product-development strategy 50-50
Market-penetration is the highest
Business Unit Strategic Planning
Developing a strategic fit between
organizational goals and capabilities, and
changing marketing opportunities
Ben & Jerry’s: A SWOT analysis to get it growing again
Business Portfolio Analysis- BCG Matrix
Cash Cows – SBU’s that have a high market share of a low sales growth market.
Stars – SBU’s that have a high market share of a high sales growth market.
Question marks – SBU’s that have a low market share of a high sales growth
Dogs – SBU’s that have a low market share of a low sales growth market.
Strategic Marketing Process
Process whereby an organization allocates it marketing mix resources to reach its target
Planning Phase – Situation Analysis
This is a complete analysis of the firm’s situation which assesses internal
strengths and weaknesses and external threats and opportunities (SWOT)
Internal analysis (controllable factors) – assess the firm itself to identify strengths
External analysis (uncontrollable factors) – assess the firm’s external
environment to identify opportunities and threats
Planning Phase – Marketing Objectives
Specific levels of performance desired for a product or product line to be
achieved by a given date.
Stated in terms of market share, sales, profit
Should be measureable, attainable, specific, and consistent with organizational
Planning Phase: Product Positioning - The process where marketers try to
create a product image or identity in the minds of their target market relative to
Implementation PhaseProcess of putting the marketing plan into action. Involves great attention to detail
Evaluation- Involves measuring the results of the actions from the implementation
phase and comparing them with goals set in the planning phase.
1- Sales analysis
2- Market share analysis
3- Expense to sales analysis
SBU- Strategic Business Unit
Establishing Strategic Business Units
A business can be defined in terms of three dimensions: customer groups, customer
needs, and technology.
It is a company within a company
The business is differentiated from the rest of the company
It has its own set of competitors
It is a separate profit centre
Characteristics of SBUs•
It is a single business or collection of related businesses
It has its own set of competitors
It has a leader responsible for strategic planning and profitability
Assigning Resources to SBUs
The purpose of identifying the company’s strategic business units is to develop separate
strategies and assign appropriate funding to the entire business portfolio.
Senior managers generally apply analytical tools to classify all of their SBUs according
to profit potential. Two of the best-known business portfolio evaluation models are the
Boston Consulting Group model and the General Electric model.
Porter’s Generic Strategies
Overall cost leadership- The cost leadership strategy advocates gaining
competitive advantage due to the lowest cost of production of a product or
service. Lowest cost need not mean lowest price. Costs are removed from every
link of the value chain- including production, marketing, and wastages and so on.
The product could still be priced at competitive parity (same prices as others), but
because of the lower cost of production, the company would be able to sustain
itself even through lean times and invest more into the business all throughout.
Examples are the TPS system developed by the Toyota Motor Company. The
TPS system aims to cut costs throughout the company, but Toyota cars are still
priced at almost the same levels as American or other Japanese cars.
Differentiation- The 'differentiation' strategy involves creation of differentiated
products for different segments. A variety of products, each branded and
promoted differently with levels of function, allows a company to 'desensitize'
prices, and on the basis of being different, charge premium or higher prices. This
strategy also provides a hedge against different markets and product life cycles,
allowing cash flow to come in even if a few products decline, while others grow or
A prime example of this strategy is Hindustan Lever, which, while focused on
FMCG, has a range of products even within the soaps category for different
segments. Such a strategy needs strong segmentation, marketing and branding
Focus- The 'focus' strategy involves focusing on a narrow, defined segment of
the market, also called a 'niche' segment. For example, Porche markets to the
particular segment that likes fast and expensive cars and can afford it. A
company in a niche market has customers who understand, appreciate and can
pay a premium for their indulgence. Competitive advantage - either by cost or
differentiation- is created especially for the niche. But the risks are that the niche
may not grow, or it may disappear with time and change.
There are four forms of MDS1. Exporting- to ship (commodities) to other countries or places for sale, exchange,
2. Licensing- A document, plate, or tag that is issued as proof of official or legal
3. Joint Venture- A business arrangement in which two or more parties agree to
pool their resources for the purpose of accomplishing a specific task. This task
can be a new project or any other business activity. In a joint venture (JV), each
of the participants is responsible for profits, losses and costs associated with it.
However, the venture is its own entity, separate and apart from the participants'
other business interests.
4. Direct Investment- The purchase or acquisition of a controlling interest in a
foreign business by means other than the outright purchase of shares.
In domestic finance, the purchase or acquisition of a controlling interest or a
smaller interest that would still permit active control of the company.