1. Marketing Management
Unit – One: Introduction Gyani Malla
Lecturer: BMC
.
1. Meaning, definitions and Features of Marketing.
1.1 Meaning.
Marketing is the function of buying and selling of goods and services to satisfy need and wants of target
customers /consumers for getting organizational standard objectives, considering social responsibilities.
Marketing is the function of creating, promoting and offering right product for satisfying customers’
existing and potential requirements considering environmental factors to get objectives. So, it identifies
the customers’ existing and hidden needs and wants also.
Marketing is concerned with demand stimulating and demand fulfilling activities, so it is called demand
management also.
Marketing creates and deliver living standard of customers. It creates value in the products for
satisfying customers’ needs through changing in the form, place, and ownership and creating the time
utility. Value attracts customers and provides satisfaction and satisfaction retains customers with the
organization.
Marketing is the continuous process of planning, implementing and controlling of right marketing mix
or design to satisfy customers’ needs, considering social responsibilities for goal achievement.
So consumers’ satisfaction, organizational objectives and social responsibilities are main three pillars of
Modern marketing.
1.2 Definitions
1. According to the Philip Kotler, “ Marketing is a social process by which individual and groups
obtain what they need and want through creating, offering and freely exchanging products and
services of values with other”
2. According to the American Marketing Association, “ Marketing is the process of planning and
executing the conception, pricing, promotion and distribution of ideas, goods and services to
creates exchanges that satisfy individual and organizational objectives”
3. According to the Stanton , Etzel and Walker, “ Marketing is a total system of business activities
designed to plan , price, promote and distribute want- satisfyi9ng products to target market to
achieve organizational objectives”
1.3 Characteristics / features of Marketing

2. 1. Marketing satisfies customer’s needs and wants.
2. Marketing achieves organizational objectives.
3. Marketing facilitates exchange relationship.
4. Marketing consists of various activities.
5. Marketing is a demand management.
6. Marketing is a continuous and social process.
7. Marketing is total system of business activities.
8. Marketing is open system.
9. Marketing operates in dynamic environment.
10. Marketing creates the value of products.
11. Marketing is a creation and copy etc.
2. Conceptual development of Marketing in the era of globalization.
2.1 Development of marketing concepts
From beginning up to now, various concepts of marketing have developed. They are,
1. The production concept.
(This concept believes that consumers will favor those products which are widely available and
low in cost.)
2. The Product concept.
(This concept believes that consumers will favor quality products which are available at
reasonable priced. So marketing focuses on improving in the product quality, innovation and
performance)
3. The selling concept.
(This concept believes that consumers will not be motivated to buy the product unless they are
persuaded to buy. So it concept focuses on the promotional tools like advertising, public relation
and publicity, effective personal selling and sales promotion)
• These three concepts are also known as old concepts because consumers’ satisfaction is ignored
by these three concepts. They have formulated and implemented all marketing activities from the
side of sellers only.
4. The Marketing concept.
(This concept focuses on customers’ satisfaction of target market. It is new concept also.)
5. The customer concept.
(This concept focuses on satisfaction of each and every customer of target market.
Generally it is very widely used by the service providers or organizations to satisfy individual
needs and wants)

3. Concept Objectives / Focus Means Starting points Ending points
Ends
The Profit Production Mass production Factory/ after After sale of
Production through efficiency -Mass production product
production distribution /
efficiency wide availability.
Low price
The Profit Product High quality Factory/ after After sale of
Product through quality Innovation production product
well – made Better
or quality performance.
products
The Selling Profit Promotion Heavy promotion Factory/ after After sale of
through tools Aggressive production product
high sales selling
volume Reasonable / low
price.
The Profit Customers’ Target market Target market Not finish after
Marketing through needs Customers’ need before sale of product /
customer orientation or satisfying product production running as a
satisfaction satisfaction Integrated cycle
of target marketing
market
The Profit Individual’s Customers’ Individual Not finish after
customer through customers’ satisfying product customer of sale of product /
high satisfaction One-to- one target market or running as a
customer marketing before cycle
loyalty Integrated production
marketing
The Profit Social Target market Target market Not finish after
Societal through responsibility Customers’ need before sale of product /
Marketing customer orientation. satisfying product production running as a
satisfaction Integrated cycle
and social marketing
well being. Social
responsibility.
6. The societal marketing concept.
(This concept consider social responsibilities or welfare while making marketing decisions)
2.2 Comparative features of marketing concepts.
3. Marketing in the era of globalization or Trend in marketing

4. 1. Globalization or global marketing
( Globalization is process of interaction and integration among the people, companies and
government of different nations )
2. Growth of global brands.
3. Direct marketing
4. E- marketing
5. Quality marketing
6. Relationship marketing
7. Pro - and re acting marketing
8. High speed in technological change
9. Net work marketing
10. Serving marketing
11. Out sourcing
12. Ethical marketing
13. Sport marketing
14. Privatization
15. Development of cross culture
16. Very high marketing competition
17. IT - based market coverage etc
4. Holistic marketing concept.
Holistic marketing concept is very new concept in the marketing. It develops, focuses and integrates all
marketing activities, processes and programs by which marketing objectives can be achieved in this very
competitive market. It believes that every activities of an organization in marketing are important.
Actually, it is integrated perspective of marketing or all marketing activities should be integrated and
implemented to explore the value, maximize the customer value, communicate the customer value and
deliver the customer value for customer satisfaction. Similarly, it focuses on development,
implementation and controlling of marketing activities and programs for getting success. It includes
various concepts. They are,
1.Relationship Marketing ( Stake holders )
2. Integrated marketing
- all marketing activities ( marketing mix 4ps or 7ps)should be coordinated and integrated to
achieve marketing objectives
- Marketing activities should be coordinated and integrated with other organizational activities
to achieve marketing objectives.
3. Internal marketing
- Training and education to employees
- Motivation to employees
4. Social responsibility marketing
5. Performance marketing.
- To create the superior product value

5. -to reduce the costs
- To add the value
5. Customer Value and Satisfaction.
5.1 Customer value
Value = benefit /Cost.
Value is the ratio between what customers get and what they give from purchase work. Customers get
benefit or utility and give cost. Benefit can be functional and emotional. Cost can be monetary and non
monetary.
Value attracts customers and provides satisfaction. Satisfaction retains customers with the product or
organization. Customers are the value maximize, so they consider very much about the product value
while making choice of product.
Customer value is also known as delivered value. It is the difference between total customer value and
total customer costs. It can be cleared from the given formula also.
CDV = TCV – TCC
Where,
CDV = Customer delivered value
TCV = Total customer value
TCC = Total customer cost
TCV = PV + SV + PV + IV
Where,
PV = product value (It is generated by the features, quality and benefits. Features include design, size,
color, and packaging.)
SV = Service value (Pre sales service. During sales service and post sales service)
PV = Personnel value (It is generated by salespersons)
IV = Image value (It is generated by the ownership and use of the brand. It is intangible or emotional
value which provides psychological satisfaction also
• Product and service value are also known as functional benefits and image value is known as
emotional benefits.
TCC = MC + TC + EC + PC
Where,

6. MC = Monetary cost (It is price of product or monetary value of the product)
TC = Time cost (It is time spent for searching, evaluating, buying and other decision processes
related to product or service. Generally high involvement product needs more time in
comparison to low involvement product)
EC = Energy cost (It is energy spent through physical efforts of the customer)
PC = Psychological cost. (It is the cost related to frustration and dissatisfaction of the customer
with the product)
Marketing should increase the value of the product for the customer to attract, satisfy and retain
them. Value can add by:
- Increasing the functional and emotional benefits in the product
- Reducing the costs( charging low or flexible price making easy available of products, reducing
the delivery time and assuring about the product quality by offering warranty and making
counseling )
5.2 Customer satisfaction
It is a customer oriented age. So customer satisfaction is the key of success in this very competitive
market. Satisfaction is the function of product / service performance and expectations. It is difference
between customers’ perceived performance from the product / service and expectation about the
product/service performance. It is post purchase outcome where the customers compare their
expectation with the actual performance of product or service.
Customers’ expectation regarding service quality can be vary according to time, situation, attitude and
nature of customers, income level, types of needs etc. It is formed by the past experiences, advice from
friends and relatives, promotional activities and promises etc. So it needs continuous improvement to
meet customers need and expectations. Various research studies have revealed that there is an intimate
connection between service quality, customer satisfaction, and profitability of financials organizations.
So, it is very powerful strategic weapon of an organization to get strategic advantages.
According to the Philip Kotler: ‘Satisfaction is a person’s feelings of pleasure or disappointment
resulting from comparing a product’s perceived performance in relation to his/ her expectations”
If the performance matches the expectations the customer is satisfied (performance = expectations=
provides satisfaction) If the performance is below the expectations the customer is dissatisfied
(performance < expectation = provides dissatisfaction). If the performance exceeds the expectations the
customer is highly satisfied or delighted (performance > expectation = makes loyal or high level of
satisfaction)
Satisfied or highly satisfied customers retain with the organization or product. Generally they do not
switch toward the another brand.
Zairi (2000) found that satisfied customers possibly share their experiences with five or six people while
dissatisfied clients might inform another ten. It cost 25 per cent more to recruit new customers than to
maintain existing ones. Naumann (1995) and Dawes and Swailes (1999) also pointed out that retaining

7. an existing customer costs about five times less in money, time and corporate resources than
attracting a new customer. Newman et al. (1998) indicated that an increase of only 5 per cent in
customer loyalty would lift profitability about 25–85 per cent.
5.1.1 Methods for tracking customer satisfaction.
1. Complain and suggestion system
2. Customer satisfaction surveys
3. Modification in product according to the customers’ requirements.
4. Ghost shopping ( mystery shoppers are hired by the organization to report about strong and
weak points of products )
5. Lost customer analysis (learn about the reasons for not buying )
6. Increase in the customers’ value
7. Use of quality marketing
8. Relationship marketing
9. Market analysis etc
6. Value chain
The value chain, also known as value chain analysis, is a concept from business management that was
first described and popularized by Michael Porter in his 1985. It is used to increase the customer value
or value of the product in comparison to its competitors to get strategic advantages. This analysis
identifies, describes, analysis, arranges and establishes linkages among value- creating activities within
and around an organization which creates the value of the product. It is tool to analyses the cost
competitiveness, value creation and assess the competitive strength of an organization. The value chain
analysis identifies nine types of relevant activities that create value and cost in a business. Primary
activities are related with the physical creation of product, sales, distribution and after sales services.
Support activities are necessary to support the primary activities or to sustain the primary activities. Out
of the nine activities five are primary and four are support activities. It can be shown from the figure.

8. Primary activities
Inbound logistics: Refers to goods being obtained from the organizations suppliers ready to be used for
producing the end product.
Operations: The raw materials and goods obtained are manufactured into the final product. Value is
added to the product at this stage as it moves through the production line.
Outbound logistics: Once the products have been manufactured they are ready to be distributed to
distribution centers, wholesalers, retailers or customers.
Marketing and Sales: Marketing must make sure that the product is targeted towards the correct
customer group. The marketing mix is used to establish an effective strategy; any competitive advantage
is clearly communicated to the target group by the use of the promotional mix.
Services: After the product/service has been sold what support services does the organization have to
offer. This may come in the form of after sales training, guarantees and warranties.
With the above activities, any or a combination of them, may be essential for the firm to develop the
competitive advantage or creates the value of the product.

9. Support Activities
The support activities assist the primary activities in helping the organization achieve its competitive
advantage. They include:
Procurement: This department must source raw materials for the organization and obtain the best price
for doing so. For the price they must obtain the best possible quality
Technology development: The use of technology to obtain a competitive advantage within the
organization. This is very important in today’s technological driven environment. Technology can be
used in production to reduce cost thus add value, or in research and development to develop new
products, or via the use of the internet so customers have access to online facilities.
Human resource management: The organization will have to recruit, train and develop the correct
people for the organization if they are to succeed in their objectives. Staff will have to be motivated and
paid the ‘market rate’ if they are to stay with the organization and add value to it over their duration of
employment. Within the service sector e.g. airlines it is the ‘staff’ who may offer the competitive
advantage that is needed within the field.
Firm infrastructure: Every organization needs to ensure that their finances, legal structure and
management structure works efficiently and helps drive the organisation forward.
Support activities work together effectively and efficiently to help gain the organisation a superior
competitive advantage.
7. Value delivery net work or Supply chain.
Value delivery net work is network of key partners to create the value of the product or to achieve
superior competitive advantages. A single organization is not sufficient to create higher value of the
products. It needs better network with key partners (suppliers, distributors and customers) for getting
higher value or superior competitive advantages.
A Value Delivery is a company's supply chain. Organization makes net work with partners or specific
suppliers and distributors in the process of producing goods and delivering them to market. It involves
using competitive advantages external to the firm (suppliers, distributors, customers).
Each party in the chain creates a higher value for other party involved in the chain. It is mutually
beneficial relationship with key partners to capture the value generated by supply chain. It creates higher
value and deliver better satisfaction to customers. It can be seen from the following figure.

10. Delivery Delivery Delivery
Milk supplier ICE cream ICE cream Customer
q
company retailer
Order Order Order
8. Cost of lost customers
If organization loses the profit because of lost customers, is known as cost of lost customers. Similarly,
if organization loses the existing customer, it means it loses the opportunity, so opportunity cost is also
cost of lost customers. Every organization should monitor the rate of lost customer or defection rate of
customers to take right strategic decision to prevent the rate of lost customers. If customers are not
satisfied from their purchase work/ product, they move toward the competitors’ brand. At present, main
challenge for modern marketing is how to retain customer with organization, not only how to attract new
customers. Cost of lost customers can be calculated from the following way.
Suppose, a company has 10,000 accounts, Rate of lost customer is 10% or 1000 accounts, Revenue loss
per account is Rs. 5000.
Here, Total revenue loss = 100 x Rs 5000 = 5,000,000.
Profit margin = 10 % or profit loss = Rs.5.00.000
8.1 Steps for reducing customer defection.
1. Define and measure the rate of retention.
2. Identify the causes for customer defection.
3. Measure the loss of profit from customer defection.
4. Estimate the cost of reducing the defection rate.
5. Listen the opinion of customers
9. Customer Retention
Modern marketing focuses on retaining existing customers. High customer satisfaction is the key to
retain the customers. Retained customers are the assets of an organization because they are not switched
toward the other brand; similarly they talk favorably about the product and organization. So ultimate
goal of an organization is to retain customers. Customer retention is very importance because of the
following reasons.
1. They stay with the organization for longer period
2. They do not move toward the another brand
3. They talk favorably about the organization and product.
4. They purchase easily other new product of organization without any question or hesitation.

11. 5. Cost of servicing (counseling and informing) of loyal or retained customer is lower than the cost
of servicing a new customers.
9.1 Methods of Customer Retention.
1. Monitor the post purchase satisfaction level
2. Regularly follow- up with the customers
3. Establish the complaints and suggestion bos or system
4. Use of relationship Marketing
5. Use of quality marketing
10. Total Quality Management and Total Quality Marketing( TQM.)
10.1 Total Quality Management
Total quality management in marketing refers continuous improvement in the product quality for
customer satisfaction. It is commitment by the top management for creating, promoting and delivering
customer satisfying products for getting marketing objectives. Similarly it refers utilization of
organizational resources for designing higher value product for customer satisfaction.
10.2 Total Quality Marketing
This concept was developed from the Japan. Quality is customer’s perception about the product
excellence that satisfies customers. It is the totality of product features that can satisfies customers. It is
a continuous process for quality improvement in design, size, features, technology, services, facilities
etc. Product quality is necessary for customer satisfaction and goal achievement. There is very close
relationship between product quality, customer satisfaction and goal achievement. It can be seen from
the following figure.
Product Quality
Customer Goal
Satisfaction Achievement.
Relationship between Product Quality, Customer Satisfaction and Goal Achievement.
10.2.1 Requirements for Total Quality Marketing.
1. Support of top management.
2. Use of modern marketing concept.
3. Use of total quality management.
4. Use of latest technology
5. Use of quality raw materials
6. Effective marketing information system.
7. Use of statistical quality control tools for measurement of quality
8. Restructuring organizational structure.
9. Training for employees
10. Marketing Research.

12. 10.2.2 Tools or Techniques of TQ marketing.
1. Right first time or Zero defect
2. Use of Quality circle.
3. Just – in – time
4. Bench marketing.
5. Out sourcing
6. Training
7. Use of standard certificate Use of cost effective technology.
8. Establish the effective control system.
9. Use of quality raw materials.
10. 11. Customer Profitability.
11. Customer Profitability = Total customer revenue – Total customer costs.
Customer profitability is difference between total customer revenue and total customer cost. It is total
sales revenue generated from a customer or customer group, less all the cost that are incurred in
servicing that a customer or customer group. For example, customer revenue of bank customer can be
interest achieved from customers loan and service charge, customer cost can be product cost (Size of
interest given to depositors amount), loan collection cost, relationship cost, promotion cost etc.
Organization can identifies more profitable customer, less profitable customer and unprofitable customer
with the help of customer profitability analysis. Generally, it is analyzed by the ABC (Activity based
costing) method. This analysis helps to convert less profitable customers into more profitable customers,
unprofitable customers into profitable customers through taking right strategic decisions.
According to the Philip Kotler and Kavin Lave Keller ( 2006) , customers are classified into four types
on the basis of profit tiers of rank.
1. Platinum customers- Most profitable customers
2. Gold customers – Profitable customers.
3. Iron customer – Low profitable customers.
4. Lead customers- Unprofitable customers.
11. Task of Marketing.
1. Set the right marketing objectives, strategies and plan.
2. Analysis the environmental factors
-customers needs and wants
- Competitors strategies
-Competitive advantage
-SWOT
- Competitive position etc.
3. Develop and design right marketing Mix
4. Deliver the product value to customers
5. Build the customer relationship
6. Build the strong and easeful brand
7 Set the effective communication system
8. Creation or innovate superior product value
9. Controlling the marketing acting etc