VTU MM Module-1
This document provides an introduction to the topic of Marketing Management. It discusses key concepts such as the nature and scope of marketing, marketing orientations like production and product concepts, and the marketing mix of product, price, place, and promotion. It also examines the marketing environment including the microenvironment of suppliers, customers and competitors as well as the macroenvironment factors such as economic, natural, technological, cultural and political environments. The document aims to give an overview of foundational marketing concepts.
VTU MM Module-1
- 1. MARKETING MANAGEMENT 12MBA24 By: K. Lakshmi Narayana Reddy MBA, M.Phil, PGDFM, (Ph.D)
- 2. INTRODUCTION TO Marketing Management By: K. Lakshmi Narayana Reddy MBA, M.Phil, PGDFM, (Ph.D)
- 3. MARKETING MANAGEMENT Module-1 Module-1 Introduction To Marketing
- 4. Content Content s: s: MODULE 1 • Introduction:Nature and scope of marketing, Evolution, Various marketing orientations, Marketing Vs Selling concepts, Consumer need, Want and demand concepts, • Marketing Environment – Assessing the impact of micro and macro environment. • Marketing challenges in the globalized economic scenario.
- 5. What is Marketing? Whatis Marketing? • Process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others. • More simply: Marketing is the delivery of customer satisfaction at a profit.
- 6. • Is the art and science of choosing target market and building profitable relationship with them this involves getting keeping, and growing customers through creating delivery and communicating superior customers, value marketing management is customer management and demand management. • Social definition 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.
- 7. Marketing Definition Cont…. Marketing Definition Cont…. • Management definition It is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational goals. • Marketing management can be described as carrying out the tasks that achieve desired exchanges, between the corporation, and its customers.
- 8. Understanding of some Understandingof some Terms Terms • Market • Marketing • Selling • Customers • Marketing Management • Satisfaction
- 9. Nature and scopeof Nature and scope of •Marketing Marketing It is managing profitable Customer Relationships. • Building CRM is based on customer value & Satisfaction. • The main goal is to attract new customers by promising & offering superior value & retain by delivering satisfaction. • Marketing playing important role in both Profit & Non Profit Making organizations. • Marketing deals with customers more than any other business functions. • Marketing is all about offering products, services & achieve full satisfaction.
- 10. EVALUTION OF MARKETING Era Prevailing attitude and approach Production • Consumers favor products that are available and highly affordable • Improve production and distribution • Availability and affordability is what the customer wants’ PRODUCT • Consumers favor products that offer the most quality, performance and innovative features • ‘A good product will sell itself’ SALES Only sales concept. MARKETING Focus on needs, wants etc,, Customer is a king. RELATIONSHIP CRM MARKETING
- 11. Core Marketing Core Marketing Concepts Concepts Offerings Products Needs, wants, and and demands Services Core Core Marketing Marketing Concepts Concepts Markets Value, satisfaction, and quality Exchange, transactions, and relationships
- 12. What Motivates aConsumer What Motivates a Consumer to Take Action? to Take Action? • Needs - state of felt deprivation for basic items such as food and clothing and complex needs such as for belonging. i.e. I am thirsty. Needs are basic human requirements • Wants - form that a human need takes as shaped by culture and individual personality. i.e. I want a Coca- Cola. Wants are needs directed to specific objects/services that might satisfy the need Demands - human wants backed by buying power. i.e. I have money to buy a Coca-Cola. This is the wants for specific products backed by an ability to pay.
- 13. What Will SatisfyConsumer’s What Will Satisfy Consumer’s Needs and Wants? Needs and Wants? • Products - anything • Services - activities or that can be offered to benefits offered for a market for attention, sale that are acquisition, use or essentially intangible consumption and that and don’t result in the might satisfy a need or ownership of anything. want. • Examples: banking, • Examples: persons, airlines, haircuts, and places, organizations, hotels. activities, and ideas.
- 14. How Do ConsumersChoose How Do Consumers Choose Choose Among Products and Choose Among Products and •Services? Value - benefit that the customer Services? Customer gains from owning and using a product compared to the cost of obtaining the product. • Customer Satisfaction - depends on the product’s perceived performance in delivering value relative to a buyer’s expectations. Linked to Quality and Total Quality Management (TQM).
- 15. How do Consumers How do Consumers Obtain Obtain Products and Services? Products and Services? • Exchanges - act of obtaining a desired object from someone by offering something in return. • Transactions - trade of values between parties. Usually involves money and a response. • Relationships - building long-term relationships with consumers, distributors, dealers, and suppliers.
- 16. VARIOUS MARKETING ORIENTATIONS/ PHILOSOPHIES Marketing Selling Societal Product Production Mktg
- 17. Marketing Management Marketing Management Philosophies Philosophies • Consumers favor products that are Production Concept Production Concept available and highly affordable •Improve production and distribution •Consumers favor products that offer Product Concept Product Concept the most quality, performance, and innovative features •Consumers will buy products only if Selling Concept Selling Concept the company promotes/ sells these product •Focuses on needs/ wants of target Marketing Concept Marketing Concept markets & delivering satisfaction better than competitors •Focuses on needs/ wants of target Societal Marketing Concept markets & delivering superior value Societal Marketing Concept •Society’s well-being
- 18. Marketing & SalesDifferences Marketing & Sales Differences SELLING MARKETING 1. Starts with seller & 1. Starts with buyers & concerned with sellers Concerned with buyer needs. needs. 2. Core of business activity is 2. Core of business activity is seller. Buyer. 3. Converts products into 3. Converts needs into Money. products. 4. It’s a products-Producing 4. Its customer satisfying Process. process. 5. Marketing Mix planned as 5. Customer dictates the plan per seller Needs. of MM. 6. Cost determines price. 6. Market determines price. 7. Selling & Promoting. 7. Integrating Marketing. 8. Production is the central 8. Marketing is the central function of business. function of business. 9. Customer is the last link in 9. Customer is the primary business. link in business
- 19. Marketing & Sales Marketing& Sales Concepts Concepts Contrasted Contrasted Starting Focus Means Ends Point Selling Profits Existing Factory and through Products Promoting Volume The Selling Concept The Selling Concept Profits Customer Integrated Market through Needs Marketing Satisfaction The Marketing Concept The Marketing Concept
- 20. Functions of Functions of Marketingfunctions Marketing • A. Exchange 1. Buying 2. Selling • B. Physical distribution functions 3. Transporting 4. Storing •C. Facilitating functions 5. Standardizing and grading 6. Financing 7. Risk taking 8. Securing marketing information
- 21. Assessing Marketing AssessingMarketing Environment Environment • Includes: – Microenvironment: Factors close to the company that affect its ability to serve its customers. – Macro environment: larger societal forces that affect the microenvironment. » Considered to be beyond the control of the organization.
- 22. Factors in the Factorsin the Microenvironment Microenvironment
- 23. The Company’s The Company’s Microenvironment Microenvironment • Suppliers: – Provide resources needed to produce goods and services. – Important link in the “value delivery system.” – Most marketers treat suppliers like partners.
- 24. The Company’s The Company’s Microenvironment Microenvironment •Marketing Intermediaries: – Help the company to promote, sell, and distribute its goods to final buyers » Resellers » Physical distribution firms » Marketing services agencies » Financial intermediaries
- 25.
- 26. 5 Types of 5Types of Customers Customers • Consumer markets • Business markets (B to B) • Reseller markets • Government markets • International markets
- 27. Competitor Competitor s s • Must understand competitor’s strengths • Must differentiate firm’s products and offerings from those of competitors • Competitive strategies should emphasize firm’s distinctive competitive advantage in marketplace
- 28.
- 29. The Macro The Macro environment environment • The company and all of the other actors operate in a larger macro environment of forces that shape opportunities and pose threats to the company.
- 30. The Company’s Macro TheCompany’s Macro environment environment
- 31. Economic Economic Environment Environment Consists of factors that affect consumer purchasing power and spending patterns. • Changes in Income • Income Distribution
- 32. Global Economic GlobalEconomic Development Development Key Key Changes in Income Changes in Income Economic Economic Concerns for Concerns for Marketers Marketers Changing Consumer Changing Consumer Spending Patterns Spending Patterns
- 33. Natural Natural Environment Environment • Involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.
- 34. Natural Natural Environment Environment Conservation Conservation Of Resources Of Resources Factors Affecting Factors Affecting Ecotourism Ecotourism the the Natural Natural Environment Environment Recycle and Recycle and Reduce Waste Reduce Waste
- 35. Technological Technological Environment Environment • Most dramatic force now shaping our destiny. • Robots and machines • Computerized video checkout services • Electronic guest room locking systems • Locking fax machines receive orders at restaurants • The development of the Internet
- 36. Cultural Cultural Environment Environment • The institutions and other forces that affect a society’s basic values, perceptions, preference, and behaviors.
- 37. Political Political Environment Environment Increased Increased Changing Changing Emphasis on Emphasis on Increasing Increasing Government Government Ethics & Ethics & Legislation Legislation Agency Agency Socially Socially Enforcement Enforcement Responsible Responsible Actions Actions
- 38. New Challenges New Challenges New M arketing Landscape & Information Nonprofit Technology Marketing Emerging Emerging Ethical Concerns Challenges Challenges Globalizatio n Changing World Economy
- 39. Marketing Mix MarketingMix • It is the tools that an organization employs to pursue its marketing objectives in the target market • Product, Price, Place, Promotion • 4 C’s – Customer solution, Cost, Convenience, Communication
- 40. • Product – Physical good features – Quality level – Accessories – Packaging – Warranties – Product lines – Branding
- 41. • Price – Flexibility – Price level – Terms – Differentiation – Discounts – Allowances
- 42. • Place – Channel type – Exposure – Intermediaries – Outlet locations – Transportation – Storage – Managing Channels
- 43. • Promotion –Promotion blend – Salespeople » Number, selection, training, incentives – Advertising » Targets, media types, types of ads, copy thrust – Sales promotion – Publicity
- 44. Who Purchases Products WhoPurchases Products and Services? and Services? Actual Actual Market -- buyers Market buyers Buyers who share a Buyers who share a particular need particular need or want that can or want that can be satisfied by a be satisfied by a company’s products company’s products Potential Potential or services. or services. Buyers Buyers
- 45. Marketing Marketing Management Management Marketing Management Implementing programs to create exchanges with target buyers to achieve organizational goals Demand Management Finding and increasing demand, also changing or reducing demand Profitable Customer Relationships Attracting new customers and retaining current customers
- 46.
Editor's Notes
- #12 Core Concepts This CTR corresponds to Figure 1-1 on p. 4 and relates to the discussion on pp. 3-10. Also to the CTRs numbers 4 - 8 which follow. Core Concepts Needs. These emerge from a state of felt deprivation. Ask students to distinguish among physical, social, and individual needs. Wants . These are the form taken by human needs as they are shaped by culture and individual experience. Have students provide examples for different wants based upon geographical differences, gender, age, wealth. Link culture to socio-economic standing, education. Demands . These are wants backed by buying power. Discuss such popular items as dream vacations or favorite cars to illustrate the difference between wants and demands. You may want an Acura Legend but drive a Subaru Justy. Introduce the idea that demands are often for a bundle or group of benefits and may address a number of related needs and wants. Products . These are anything offered for sale to satisfy a need or want. Have students discuss an extended view of products to include services and ideas. Discuss the role of value in distinguishing products. Discussion Note: Ask students to identify their product choice set for cars, vacations, dating partners, or college professors. Exchanges . These are the act of obtaining desired objects by offering something in return. Link to barter economies and promises to pay (i.e., credit, checks). Transactions. These are an actual trade of value between at least two parties. Transaction marketing is part of the larger concept of relationship marketing in which parties build long-term, economic ties to enhance quality and customer-delivered value. Markets . These are the set of actual and potential buyers of a product. Markets may be decentralized or centralized. Markets exist wherever something of value is desired, such as in the labor market, the money market, even the donor market - for human “products” such as blood or organs.
- #18 Five Marketing Philosophies This CTR relates to the material on pp. 12-17. Teaching Tip: You may find it useful to ask students to give their definitions of philosophy. How do they use philosophies for studying? dating? planning their time? Work from their examples to the idea that businesses too have philosophies about how to get things done. The Production Concept. One of the oldest concepts, it holds that consumers favor products that are available and affordable. Management emphasizes production and distribution efficiency. Examples from the text include Ford's Model T and Texas Instruments. The Product Concept . This concept focuses on the actual product in an effort to continuously improve quality, performance, and features. May lead to marketing myopia or the tendency to too narrowly define the scope of one's business. Consumers buy products for their benefits, not their features. The Selling Concept . This concept views consumers as unwillingly customers whose inherent opposition must be overcome to make a sale. It is most often used today for unsought goods. The selling concept tends to encourage sellers to misrepresent the true nature of their products or services and can lead to problems in maintaining high customer satisfaction. The Marketing Concept . This concept links the company's success with the consumer's continuing satisfaction. Its "outside-in" approach starts with a well defined target market, an analysis of their needs and wants, and then builds the company's offering around meeting those needs better than the competition (Note: the selling and marketing concepts are contrasted on the following CTR of Figure 1-4). The Societal Marketing Concept . This concept adds to the marketing concept the idea that the company should contribute to the betterment of society as a whole (Note: The societal marketing concept is developed in more detail on a following CTR of Figure 1-5 and the accompanying notes).
- #20 Marketing and Sales Concept Contrasted This CTR corresponds to Figure 1-4 on p. 15 and to the material on pp. 14-16. Comparisons and Contrasts: The Selling Concept takes an inside-out perspective -- looking at the company’s needs and wants in terms of existing products and ways to find customers for them. The Marketing Concept takes an outside-in perspective - identifying the needs and wants of a clearly defined market and adjusting company efforts to make products that meet the needs. Discussion Note: Promotional tone may help indicate whether a company practices the selling or the marketing concept. Selling involves persuasion -- convincing the customer of their need to buy existing products. Marketing, at its best, involves information -- bringing the developed product to the awareness of a target market that recognizes need satisfying products. As the text notes, companies can let their own success lock them into a rigid selling structure. As times change, and they always do, those companies fail to see the need for meeting new and emerging consumer needs. The marketing concept helps companies focus on customer need satisfaction , leading to long-term success by customer retention .
- #22 Microenvironment includes: the company itself, supplies, marketing channel firms, customer markets, competitors, and publics. Macroenvironment includes: demographic, economic, natural, technological, political, and cultural forces.
- #25 Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers who buy and resell merchandise. Resellers often perform important functions more cheaply than the company can perform itself. However, seeking and working with resellers is not easy because of the power that some demand and use. Physical distribution firms help the company to stock and move goods from their points of origin to their destinations. Examples would be warehouses (that store and protect goods before they move to the next destination). Marketing services agencies (such as marketing research firms, advertising agencies, media firms, etc.) help the company target and promote its products to the right markets. Financial intermediaries (such as banks, credit companies, insurance companies, etc.) help finance transactions and insure against risks associated with buying and selling goods.
- #29 Financial Public: influence the company’s ability to obtain funds. Banks, investment houses, and stockholders and the major financial publics. Media Publics: carry news, features, and editorial opinion. They include newspapers, magazines, and radio and television stations. Government Publics: Management must take government developments into account. Marketers must often consult the company’s lawyers on issues of product safety, truth in advertising, and other matters. Citizen-Action Publics: A company’s marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. Its public relations department can help it stay in touch with consumer and citizen groups. Local Publics: include neighborhood residents and community organizations. Large companies usually appoint a community relations office to deal with the community, attend meetings, answer questions, and contribute to worthwhile causes. General Public: A company needs to be concerned about the general public’s attitude toward its products and activities. The public’s image of the company affects its buying. Internal Publics: include workers, managers, volunteers, and the board of directors. Large companies use newsletters and other means to inform and motivate their internal publics. When employees feel good about their company , this positive attitude spills over to external publics.
- #39 New Marketing Challenges This CTR relates to the material on pp. 17-24. Teaching Tip: Challenge students to see marketing as an exciting and creative field needing new ideas and new solutions to emerging business opportunities. Growth of Nonprofit Marketing. More and more charitable firms and businesses that hold nonprofit status, like colleges and hospitals, are adopting a marketing orientation toward serving their constituencies. Globalization. Technological and economic developments continue to shrink the distances between countries. Computer and communications technology make possible truly global businesses that buy, sell, manufacturer, market, and service customers easily across international borders. Rising affluence creates new markets. Similarly, more European and Asian companies now compete successfully in the US. market. Changing World Economy. Even as new markets open to rising affluence in such countries as the “newly industrialized” pacific rim, poverty in many areas and slowed economies in previously industrial nations has already changed the world economy. Americans increasingly maintain living standards only by having two incomes per household. Value is hunted for by penny-wise consumers. Ethics and Responsibility . The greed of the 1980s and other problems has spurred a new interest in ethical conduct in business. Many consumers feel business in general has more of an obligation to those who generate profits -- the consumer! New Landscape and Information Technology . The new marketing landscape is a dynamic, fast-paced, and evolving function of all these changes and opportunities. More than ever, there is no static formula for success. Only strategies that incorporate and implement constant improvement in product quality and higher delivered customer value stand any chance of long-term success. Information and the internet have created a technology boom.
- #46 The Marketing Management Process The marketing concept suggests that businesses must actively manage an on-going relationship with customers. Key concepts of this perspective include: Marketing Management . The text defines marketing management as “the analysis, planning, implementation, and control of programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose of achieving organizational objectives.” Discussion Note: You might point out to students the influential role played by Professor Kotler in the development of marketing management, in both business and academic settings. Demand Management . Matching supply and demand can be a difficult balancing act. Traditional views of marketing were simplistic: build demand. Now marketers recognize the need to manage demand so that infrastructure resources are not overburdened. Discussion Note: It might help to compare demand management with Just-in-Time Inventory or Supply management. JIT lowers costs by not requiring extra capacity to hold things -- supplies or inventory -- before they are needed. By matching consumer demand to the systems designed to meet needs and wants, overall costs of marketing, and hence, the price of products, is reduced. Building Customer Relationships . Growing markets traditionally mean a plentiful supply of new customers. But as consumers become more sophisticated and as market growth slows, maintaining existing customers is the key to long term marketing success. As pointed out in the text, a continuing customer relationship means years of revenues for a company, not one time only sales. Further, existing customers are less expensive to promote to as they have already processed a great deal of product-specific information. Marketing Management This CTR corresponds to the material on pp. 11 - 12.