Engineering Economics and Engineering

1. Unit-5
Introduction to Marketing
Management
PROF. ADITYA P. MEHENDALE
ASSISTANT PROFESSOR
CIVIL ENGINEERING DEPARTMENT
MITCORER, BARSHI

2. WHAT IS MARKETING?
 Marketing is identifying and meeting human and social needs.
 In short, marketing is “meeting needs profitably.”
 Philip Kotlar, a pioneer in marketing, defined marketing as:
“Marketing is a social and managerial process by which
individuals and groups obtain what they need and want
through creating and exchanging products and value with
others.”
 The American Marketing Association defined marketing as:
“Marketing is an organizational function and a set of
processes for creating, communicating, and delivering value
to customers and for managing customer relationship in ways
that benefit the organization and its stakeholders.

3. MARKETING MANAGEMENT
 Marketing management is the art and science of
choosing target markets and getting, keeping, and
growing customers through creating, delivering,
and communicating superior customer value.

4. OBJECTIVES OF MARKETING
 To satisfy needs, wants, and demand of consumer and
business.
 To provide value, quality and satisfactions.

5. WHAT IS MARKETED?
 Goods e.g. cars, machines, watches, cosmetics
 Services e.g. restaurants
 Events e.g. world cup, Olympics
 Experiences e.g. amusement park, water park
 Persons e.g. celebrity marketing
 Places e.g. incredible India campaign
 Properties e.g. real estate
 Organizations e.g. Philips “sense and simplicity”
campaign
 Information e.g. schools, labs
 Ideas e.g.awareness, discourage smoking

6. CHARACTERISTICS / FEATURES OF
 Operational
 Customer-oriented
 Overall business philosophy
 Long-term survival
 Mutual benefits
 Business objective

7. CORE MARKETING CONCEPTS
 T
o understand the marketing function, we need to
understand the following core set of concepts.
1. Needs, Wants, and Demands
2. Target Markets, Positioning, and Segmentation
3. Offerings and Brands
4. Value and Satisfaction
5. Marketing Channels
6. Supply Chain
7. Competition
8. Marketing Environment

8. NEEDS, WANTS AND DEMANDS
 Needs are the basic human requirements.
air, food, water, clothing, shelter
E.g.
 Needs become wants when they are directed to
specific objects that might satisfy the need. Wants
are shaped by our society.
 Demands are wants for specific products backed by
an ability to pay.

9. NEEDS
 Five types of needs:
1. Stated needs (The customer wants an
inexpensive car.)
2. Real needs (The customer wants a car whose
operating cost, not its initial price, is low.)
3. Unstated needs (The customer expects good
service from the dealer.)
4. Delight needs (The consumer would like the
dealer to include an onboard navigation system.)
5. Secret needs (The customer wants friends to see
him as a savvy consumer.)

10. TARGET MARKET, POSITIONING AND SEGMENTATION
 Marketers start dividing the market into segments. They
identify distinct group of buyers by examining
demographic, psychographic, and behavioral differences
of buyers.
 After identifying market segments, the marketer then
decides which present the greatest opportunity – which
are its target market.
 For each, the firm develops a market offering that it
positions in the minds of the target buyers as delivering
some central benefit(s).
 E.g. Volvo for safety, Mahindra Scorpio luxury car (SUV)

11. OFFERING AND BRANDS
 Companies address needs by putting forth a value
proposition, a set of benefits that they offer to
customers to satisfy their needs. Offering can be a
combination of products, services, information, and
experiences.
 A brand is an offering from a known source.

12. VALUE AND SATISFACTION
 The offerings will be successful if it delivers value
and satisfaction to the target buyer.
 Value reflects the sum of the perceived tangible and
intangible benefits and costs to customers. (quality,
service, price)
 Satisfaction reflects a person’s judgments of a
product’s perceived performance (or outcome) in
relationship to expectations.

13. MARKETING CHANNELS
 To reach a target market, the marketer uses three kinds of
marketing channels.
 Communication channels deliver and receive messages from
target buyers. E.g., newspapers, magazines, radio,
television, mail, tel ephone, posters, internet.
 The marketer uses distribution channels to display, sell, or
deliver the physical product or service(s) to the buyer or user.
They include distributors, wholesalers, retailers, and agents.
 Service channels to carry out transactions with potential
buyers. They include warehouses,
transportation companies, banks, and insurance companies.

14. SUPPLY CHAIN
 The supply chain is a longer channel stretching
from raw materials to components to final products
that are carried to final buyers.
 When a company acquires competitors or expands
upstream or downstream, its aim is to capture a
higher percentage of supply chain value.

15. COMPETITION
 Competition includes all the actual and potential
rival offerings and substitutes a buyer might
consider.
 E.g. car manufacturer may buy from TATA steel or
Steel authority of India (SAIL) or from abroad; or
buy aluminum for certain parts to lighten the car’s
weight.

16. MARKETING PHILOSOPHIES – EVOLUTION OF
MARKETING CONCEPTS
 Marketing philosophies explain the following
concepts.
1. The production concept
2. The product concept
3. The selling concept
4. The marketing concept
5. The societal marketing concept
6. The holistic marketing concept

17. THE PRODUCTION CONCEPT
 Oldest concept in business.
 This concept emphasizing on improving production process and it holds
that consumers will prefer to buy products that are widely available and
inexpensive.
 Managers of production-oriented business concentrate on achieving
high production efficiency, low costs, and mass distribution. Faster
delivery leads to more customers.
 This concept is also useful when a company wants to expand
the market.
 Example: The largest PC manufacture, LENOVO in China takes
advantage of the huge inexpensive labour pool to keep costs and prices
low, there by dominate the markets.

18. THE PRODUCT CONCEPT
 This concept emphasizes in product. It holds that customers
favor products that offer the most quality, performance, or
innovative features.
 Managers in these organizations focus on investing in
research process, product development,
manufacturing and engineering for making superior products
and improving them over time.
 A new product will not necessarily be successful unless it’s
priced, distributed, advertised, and sold properly.

19. THE SELLING CONCEPT
 The goal is to increase sales volume and it holds that consumers
and business, if left alone, won’t buy enough of the organizations’
products.
 Organizations must undertake an aggressive selling and promotion
effort through advertisement and personal selling.
 Also it explains How to sell the products in markets? Organization
can attract the people or customer through
some offers such as coupons, sales, 0%
charge, instalment
providing
financial
scheme, guaranties, warranties, sometimes provides
home delivery.

20. THE MARKETING CONCEPT. . .
 It is based on customer-centered, “sense-and-
respond” philosophy. The goal of this concept is to
address the customer needs and wants.
 It holds that the key to achieving organizational
goals is being more effective than competitors in
creating, delivering, and communicating superior
customer value to its chosen target markets.
 Manager focus on identifying customer needs
wants, and preferences and market effectively to
address those needs, wants and preferences.

21. . . . THE MARKETING CONCEPT
 Selling focuses on the needs of the seller; marketing focuses
on the needs of the buyers.
 Selling is preoccupied with the seller’s need to convert his
product into cash; marketing with the idea of satisfying the
needs of the customer by means of the product and the whole
cluster of things associated with creating, delivering and finally
consuming it.
 Companies that practices both a reactive and a proactive
marketing orientation are implementing a total market
orientation and are likely to be the most successful.
 Example: Dell computer doesn’t prepare a perfect computer
for its target market, but it provides product platforms on which
each person customizes the features he desires in the
computer.

22. THE 4 P’S IN MARKETING/MARKETING MIX
 The marketing mix is the set of controllable
variables that the firm can use to influence the
buyer’s response.
 The marketing mix and 4 Ps of marketing are used
as synonyms for each other. In fact, they are not
necessarily the same things.

24. PRODUCT
 Product refers to the goods and series offered to
customers.
 The product can be subdivided into quality levels,
special features, styling, branding, product range or
mix, service back-up, warranty, durability
packaging.
 Combination of above is used for product. E.g. low
quality product backed by a high service element.

25. PRICE
 Price refers to the amount charged for the offered
product or services. The right product should be
offered at right place.
 Price is a mechanism of exchange between firm
and customer. It incorporates credit terms,
discounts, margins, resources and financial
services.

26. PROMOTION
 Promotion refers to advertising and selling part of
marketing i.e. informing potential customers of the
availability of the product, its price and place.
 Promotion includes two broad areas of advertising
and personal selling.
✓ Advertising – media/display/classified
✓ Merchandizing – promotional support for the retailer
✓ Personal selling – salesman is special discounts
✓ Publicity – press and public relations

27. PLACE
 Place refers to distribution channels used to get
your product to your customers.
 Place make the product physically available. It
includes
channel, outlet, warehouse,
distribution
factory
location, coverage stocks and freight.
 The essence of managing the marketing mix lies in
providing each group of customers with the mix of
product, price, place and promotion which suits
their needs.

28. LIMITATION OF FOUR P’S
 As the marketing mix comprises closely interrelated
elements, it is necessary to examine each to be
clear about their respective roles.
 Markets are dynamic and can be affected by a
range of uncontrollable environmental variables.
 Marketing has to devise strategies that take
account of these variables using available
marketing tools.

29. Demand/Sales Forecasting
Methods
 Jury of executive opinions
 Delphi technique (version of jury opinions
method)
■ Responses of one series of
questionnaires are used to
produce next questionnaires
Poll of sales force opinion
Converting Industry forecast into company forecast
Projection of Past Sales
■ Simple method ( On the basis of current year’s actual
sales or adding some % to it (moving average))
Next year’s sales = this year’s sales x this year’s sale
36

30. Demand/Sales Forecasting
Methods
38
■ Time series analysis
■
■ long term trends, cyclical changes, seasonal
variations, irregular fluctuations)
For long term sales forecast
■ Exponential smoothing
■ Moving average with weighted sum of past time
series numbers including higher weight to most
recent data
Equation – Next year’s sales = a (this year’s sale) +
(1-a)(this year’s forecast)
- a is small if the series of sales data changes

31. Demand/Sales Forecasting
Methods
39
■ Evaluation of past sales projection method
■ Influencing factors: Market saturation, competitor’s move,
marketing campaigns etc.
■ Regression analysis
A statistical tool used in sales forecasting and measuring
the association between company sales and other
variables
■
■
■ Simple regression ( one independent and one dependent
variable)
Multiple regression ( two or more independent variable and
one dependent variable)
The higher the co-relation the closer the association

32. Importance of demand Forecasting
• Planning & Scheduling Production
• Preparation of Budget
• Estimation of sales revenue
• Making Policies for long term investment
• Controlling Inventories
• Helps in achieving targets of the company
• Planning of Finance
• Planning of Human resource
• Continuous supply of product in to the market

33. Assessing the forecasting environment
3
3
• Controllable factors
• Uncontrollable factors
• Long-run or short- run forecast
• Leading indicators (to name few)
– New orders
– Ratio of price to unit labor cost in manufacturing
– Corporate Profit after tax
– Prices of industrial materials
– Average workweek in manufacturing

34. Levels of Market Segmentation
■ Mass Marketing
Segment Marketing
■ Differentiated Marketing
Niche Marketing
■ Concentrated Marketing
Local Marketing
■ Local customer groups
Individual Marketing
■ Customization
■
■
■
■

35. Segment
Marketing
3
5
■ Market segment
■ A group of customers who share a similar set of
needs and wants
A marketer does not create the segments. He only
identifies the segments and decides which one(s)
■
to target
■ Automobiles: Small. ,medium-sized, and luxury cars
■
Flexible market offerings to all members of a
segment, because not everyone wants exactly the
same thing
■
■ Naked solution: Basic product and service
elements that all segment members value
Discretionary options: Extra elements that not all,
but some segment members value . Provided for
an additional charge

36. Niche
Marketing
3
6
■ Niche: a more narrowly defined group
seeking distinct mix of benefits
Marketers identify niches by dividing a
segment into sub segments
Characteristics of a Niche
■
■
■
■
■
■
Customers have a distinct set of needs and wants
Customers are willing to pay a premium
Niche is not likely to attract major competitors
Nicher gains economies through specialization
■ Genetech: A breast-cancer drug
Niche has size, profit, and growth potential
■

37. Local
Marketing
3
7
■ Targeting the needs and wants of local
customer groups.
■ Citibank: Different mix of banking services in its
branches depending on neighborhood
demographics
Local marketing is also called grassroots
marketing concentrated on getting as close
and personally relevant to local customers as
possible.
■

38. Individual
Marketing
■ Tailoring products and marketing programs to the
needs and preferences of the individual customers.
Also called one-to-one marketing, or customized
marketing, mass customization
Mass-customization: Meeting each customer’s
requirements on a mass basis
Choice board: Menu of attributes, components, prices
and delivery options offered by an online company
Customerization:
■
■
■
■ Customers design a product and service by selecting their
preferences from the Choice board of the online company
Company responds to individual customers by customizing
its products, services, and messages on a one-to-one basis.
Examples. Dell (Laptop), Paint Companies, Paris Miki
(eyeglasses), DeBeers (diamond rings), Anderson Windows
(windows and doors),
■
■
47

39. Finance
▶ According to F.W.Paish, Finance may be defined as the
position of money at the time it is wanted.
▶ In the words of John J. Hampton, the term finance can be
defined as the management of the flows of money through an
organization, whether it will be a corporation, school, bank or
government agency.

40. FINANCIAL MANAGEMENT
Financial Management means planning, organizing, directing and controlling
the financial activities such as procurement and utilization of funds of the
enterprise. It means applying general management principles to financial
resources of the enterprise

41. Financial Management – Definition
▶ According to Weston and Brigham,
financial management is an area of financial decision
making, harmonizing individual motives and enterprise
goals.

42. ▶ In the words of Phillippatus,
financial management is concerned with the managerial
decisions that result in the acquisition and financing of long-
term and short-term credits for the firm.
As such it deals with the situations that require selection of
specific assets / combination of assets, the selection of
specific liability / combination of liabilities as well as the
problem of size and growth of an enterprise.
The analysis of these decisions is based on the expected
inflows and outflows of funds and their effects upon
managerial objectives.

43. OBJECTIVES OF FINANCIAL MANAGEMENT
▶ Its objectives must be consistent with the overall objectives of
business.
▶ The overall objective of financial management is to provide
maximum return to the owners on their investment in the long-
term. This is known as wealth maximization.
▶ Wealth maximization means maximizing the market value of
investment in shares of the company.

44. In order to maximize wealth, financial management must
achieve the following specific objectives
(a)To ensure availability of sufficient funds at reasonable cost
(liquidity).
(b) To ensure effective utilization of funds (financial control).
(c)To ensure safety of funds by creating reserves, re-investing
profits, etc. (minimization of risk).
(d) To ensure adequate return on investment (profitability).

45. Contd..
(e)To generate and build-up surplus for expansion and growth
(growth).
(f)Tominimize cost of capital by developing a sound and
economical combination of corporate securities (economy).
(g)To coordinate the activities of the finance department with
the activities of other departments of the firm (cooperation).

46. FUNCTIONS OF FINANCIAL
MANAGEMENT
➢ Estimating the Amount of Capital Required
➢ Determining Capital Structure
➢ Choice of Sources of Funds
➢ Procurement of Funds
➢ Utilizations of Fund
➢ Disposal of Profits or Surplus
➢ Management of Cash
➢ Financial Control

47. 1. Estimating the Amount of Capital Required:
▶ This is the foremost function of the financial manager.
▶ Business firms require capital for:
i) purchase of fixed assets,
ii) meeting working capital requirements, and
iii) modernization and expansion of business.
The financial manager makes estimates of funds required for
both short-term and long-term.

48. 2. Determining Capital Structure:
▶ Once the requirement of capital funds has been determined,
a decision regarding the kind and proportion of various
sources of funds has to be taken.
▶ For this, financial manager has to determine the proper mix
of equity and debt and short-term and long-term debt ratio.
▶This is done to achieve minimum cost of capital and maximize
shareholders wealth

49. 3. Choice of Sources of Funds
▶ Before the actual procurement of funds, the finance
manager has to decide the sources from which the funds
are to be raised.
▶ The management can raise finance from various sources
like equity shareholders, preference shareholders,
debenture- holders, banks and other financial institutions,
public deposits, etc.

50. 4. Procurement of Funds:
▶The financial manager takes steps to procure the funds required
for the business.
▶ It might require negotiation with creditors and financial
institutions, issue of prospectus, etc.
▶ The procurement of funds is dependent not only upon cost of
raising funds but also on other factors like general market
conditions, choice of investors, government policy, etc.

51. 5. Utilizations of Funds:
▶ The funds procured by the financial manager are to be
prudently invested in various assets so as to maximize the
return on investment.
▶ While taking investment decisions, management should be
guided by three important principles, viz.,
▪ safety,
▪ profitability, and
▪ liquidity.

52. 6. Disposal of Profits or Surplus:
▶ The financial manager has to decide how much to retain for
plugging back and how much to distribute as dividend to
shareholders out of the profits of the company.
▶ The factors which influence these decisions include the trend of
earnings of the company, the trend of the market price of its
shares, the requirements of funds for self- financing the future
programmers’ and so on.

53. 7. Management of Cash:
▶Management of cash and other current assets is an important
task of financial manager.
▶It involves forecasting the cash inflows and outflows to ensure
that there is neither shortage nor surplus of cash with the
firm.
▶ Sufficient funds must be available for purchase of materials,
payment of wages and meeting day-to-day expenses.

54. 8. Financial Control
▶ Evaluation of financial performance is also an important
 function of financial manager.
 ▶ The overall measure of evaluation is
Return on Investment (ROI).
 ▶ The other techniques of financial control and
evaluation include
budgetary control, cost control, internal audit, break-even
analysis and ratio analysis.
▶ The financial manager must lay emphasis on financial planning
as well.