Dr. Gopal Thapa's Introduction to Marketing Management

1. Introduction to
Marketing Management
Dr. Gopal Thapa

2. Market
 The word “Market” is derived from Latin word
“Mercatus”
 It means a place where business is transacted.
 A market is the set of actual and potential buyers
of a product (Kotler)
 Marketing is managing markets to bring about
profitable exchange relationship
 Markets are classified in many ways such as
consumer market, business market, global market,
government market, etc.

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3. Marketing
 Telling and selling
 Satisfying needs profitably
 Managing profitable customer relationship
 Creating, communicating and delivering value
 Marketing is about identifying and meeting human
and social needs in a way that harmonizes with the
goals of the organization.
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4. Marketing
 Marketing is about identifying and meeting human
and social needs in a way that harmonizes with the
goals of the organization.
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5. Definition of Marketing
 Marketing is engaging customers and managing
profitable customer relationships.
 Marketing is the process by which companies
engage customers, build strong customer
relationships, and create customer value in order
to capture value from customers in return.
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6. Definition of Marketing
 The systematic planning, implementation and control of a
mix of business activities intended to bring together buyers
and sellers for the mutually advantageous exchange or
transfer of products. (Dictionary of Marketing)
 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. (Kotler and Keller)
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7. Definition of Marketing
 Marketing is the activity, set of institutions and
processes for creating, communicating, delivering
and exchanging offerings that have value for the
customers, clients, partners and society at large.
(American Marketing Association)
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8. 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.
 Philip Kotler and Kevin Lane Keller

9. Company orientation towards
the market place
 Production concept
 Product concept
 Selling concept
 New marketing concept
 Customer concept
 Societal marketing concept
 Holistic marketing concept
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10. Holistic Marketing Concept
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11. Capturing Value from Customers
 In the first four steps of the marketing process, the
company creates value for target customers and
builds strong relationships with them.
 If it does that well, it can capture value from
customers in return, in the form of loyal customers
who buy and continue to buy the company’s
brands.
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12. Capturing Value from Customers
 The final step involves capturing value in return in
the form of sales, market share, and profits.
 By creating superior customer value, the firm
creates satisfied customers who stay loyal and buy
more.
 This, in turn, means greater long-run returns for
the firm.
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13. Capturing Value from Customers
 The outcomes of creating customer value:
customer loyalty and retention, share of market
and share of customer, and customer equity.
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14. Creating Customer Loyalty and
Retention
 Good customer relationship management creates
customer satisfaction.
 In turn, satisfied customers remain loyal and talk
favorably to others about the company and its
products.
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15. Creating Customer Loyalty and
Retention
 Studies show big differences in the loyalty
between satisfied and dissatisfied customers.
 Even slight dissatisfaction can create an enormous
drop in loyalty.
 Thus, the aim of customer relationship
management is to create not only customer
satisfaction but also customer
 delight.
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16. Creating Customer Loyalty and
Retention
 Keeping customers loyal makes good economic
sense.
 Loyal customers spend more and stay around
longer.
 Research also shows that it’s five times cheaper to
keep an old customer than acquire a new one.
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17. Creating Customer Loyalty and
Retention
 Conversely, customer defections can be costly.
 Losing a customer means losing more than a
single sale.
 It means losing the entire stream of purchases that
the customer would make over a lifetime of
patronage
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18. Customer Lifetime Value
 Customer lifetime value is the value of the entire
stream of purchases a customer makes over a
lifetime of patronage.
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19. Share of Customer
 Share of customer is the portion of the customer’s
purchasing that a company gets in its product
categories.
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20. Growing Share of Customer
 Beyond simply retaining good customers to
capture customer lifetime value, good customer
relationship management can help marketers
increase their share of customer— the share they
get of the customer’s purchasing in their product
categories.
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21. Growing Share of Customer
 Thus, banks want to increase “share of wallet.”
 Supermarkets and restaurants want to get more
“share of stomach.”
 Car companies want to increase “share of
garage,”.
 Airlines want greater “share of travel.”
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22. Growing Share of Customer
 To increase share of customer, firms can offer
greater variety to current customers.
 Or
 They can create programs to cross-sell and up-sell
to market more products and services to existing
customers
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23. Customer Equity
 Customer equity is the total combined customer
lifetime values of all of the company’s customers
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24. Customer Equity
 The ultimate aim of customer relationship
management is to produce high customer equity.
 Customer equity is the total combined customer
lifetime values of all of the company’s current and
potential customers.
 As such, it’s a measure of the future value of the
company’s customer base.
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25. Customer Equity
 Clearly, the more loyal the firm’s profitable
customers, the higher its customer equity.
 Customer equity may be a better measure of a
firm’s performance than current sales or market
share.
 Whereas sales and market share reflect the past,
customer equity suggests the future
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26. Customer Equity
 Marketers should care not just about current sales
and market share.
 Customer lifetime value and customer equity are
the name of the game.
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27. Building the Right Relationships
with the Right Customers
 Companies should manage customer equity
carefully.
 They should view customers as assets that need to
be managed and maximized.
 But not all customers, not even all loyal
customers, are good investments.
 Surprisingly, some loyal customers can be
unprofitable, and some disloyal customers can be
profitable
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28. Which customers should the
company acquire and retain?
 The company can classify customers according to
their potential profitability and manage its
relationships with them accordingly.
 classifies customers into one of four relationship
groups, according to their profitability and
projected loyalty.
 Each group requires a different relationship
management strategy.
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30. Strangers
 Strangers show low potential profitability and
little projected loyalty.
 There is little fit between the company’s offerings
and their needs.
 The relationship management strategy for these
customers is simple:
 Don’t invest anything in them; make money on
every transaction.
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31. Butterflies
 Butterflies are potentially profitable but not loyal.
 There is a good fit between the company’s
offerings and their needs.
 However, like real butterflies, we can enjoy them
for only a short while and then they’re gone.
 Efforts to convert butterflies into loyal customers
are rarely successful.
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32. Butterflies
 Instead, the company should enjoy the butterflies
for the moment.
 It should create satisfying and profitable
transactions with them, capturing as much of their
business as possible in the short time during which
they buy from the company.
 Then it should move on and cease investing in
them until the next time around
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33. True Friends
 True friends are both profitable and loyal. There
is a strong fit between their needs and
 the company’s offerings.
 The firm wants to make continuous relationship
investments to delight these customers and
engage, nurture, retain, and grow them.
 It wants to turn true friends into true believers,
who come back regularly and tell others about
their good experiences with the company.
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34. Barnacles
 Barnacles are highly loyal but not very profitable.
 There is a limited fit between their needs and the
company’s offerings.
 Like barnacles on the hull of a ship, they create
drag.
 Barnacles are perhaps the most problematic
customers.
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35. Conclusions
 The company might be able to improve their
profitability by selling them more, raising their
fees, or reducing service to them.
 However, if they cannot be made profitable, they
should be “fired.”
 Different types of customers require different
 engagement and relationship management
strategies.
 The goal is to build the right relationships with
the right customers.
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36. Role of Marketing Management
in the current scenario
 Developing marketing strategies and plans
 Capture marketing insights & performance
 Connect with customers
 Build strong brands
 Shape the market offering
 Deliver value
 Communicate value
 Create successful long-term growth
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38. Marketing Challenges of the 21st
Century
 Intense competition
 Savvy customer
 Rapid globalization
 Demand of ethics and social responsibility
 Retail transformation
 Increased cost
 Brand proliferation
 Media fragmentation
 Rapid technological change
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39. Firms’ Responses to the
Challenges of the 21st Century
 Customer Relationship Marketing
 Target Marketing
 Mass Customization
 Integrated Marketing Communication
 Partnership Marketing
 Internal Marketing
 Outsourcing
 Digitalization
 Marketing Research
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40. Marketing Environment
Trend and Forces
Dr. Gopal Thapa

41. Marketing Environment
 The term Marketing Environment refers to the
forces and factors that affects the organization
ability to built and maintain good relationship with
its customers.
 Marketing environment surrounds the organization
and it impacts upon the organization.
 Marketers have to interact with internal and
external people at micro and macro level and
builds internal and external relationships
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42. Marketing Environment
 Marketing environment comprises all the actors
and forces outside marketing that affect marketing
management’s ability to develop and maintain
successful transactions with its target customers.
 Philip Kotler
 Marketing environment includes the internal and
external influences which affect marketing
decision-making and have an impact on its
performance.
 Dictionary of Marketing
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43. Marketing Environment
 Successful companies recognize and respond
profitably to unmet needs and trends
 Ace Travels for exotic vacations
 sugar free biscuits for diabetes
 Western Union Money Transfer for the fastest
remittance.
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44. Either Chang or Die
 Puja washing shop, Mayalu bathing shop,
Brighter and Everest toothpaste which were the
market leaders a few decade back in Nepalese
market are already disappeared from the market
because they ignored macro environmental
changes
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45. Fad
 Unpredictable, short-lived, and without social,
economic, and political significance
 A company can cash in on a fad such as:
 T-shirt for Happy Holi, I love Nepal, Buddha
was born in Nepal, etc. but this is more a matter of
luck and good timing than anything else.
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46. Trends
 Direction or sequence of events that have some
momentum and durability.
 use of smart phone,
 study in boarding school,
 use of faded jeans pant,
 use of ayurvedic products
are different present trends of Nepalese market.
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47. Trends
 Trends are more predictable and durable.
 A trend reveals the shape of the future.
 A trend has longevity, is observable across
several market areas and consumer activities, and
is consistent with other significant indicators
occurring or emerging at the same time.
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48. Megatrends
 Large social, economic, political and technological
changes that are slow to form, and once in place,
they influence us for some time—between seven
and ten years, or longer.
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49. Ten Megatrends: Identified by: Naisbitt
 The booming global economy
 A renaissance in the arts
 The emergence of free-market socialism
 Global lifestyles and cultural nationalism
 The privatization of the welfare state
 The rise of the Pacific Rim
 The decade of women in leadership
 The age of biology
 The religious revival of the new millennium
 The triumph of the individual
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50. Micro Environment
 Micro environment consists of the forces close to the
company that affect its ability to serve its serve its
customers – the company, suppliers, marketing channels,
customers, competitors and publics.
 Philip Kotler
 Micro environment includes the factors or elements in a
firm’s immediate environment which affect its
performance and decision-making. These elements include
the firm’s suppliers, competitors, marketing intermediaries,
customers and publics.
 Dictionary of Marketing
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51. Micro Environment
 Individuals and organizations that are close to the
marketing organization and directly impacts its
ability to serve its customers, makes micro
environment.
 The micro environment refers to the forces that are
close to the marketing organization and directly
impact the customer experience.
 It includes the organization itself, its suppliers,
marketing intermediaries, customers, markets or
segments, competitors, and publics.
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52. Micro Environment
 Micro environment is also know as operating or
task environment.
 The actors close to the company that affect its
ability to serve its customers:
 The company
 Suppliers
 Marketing intermediaries
 Customer markets
 Competitors and
 Publics (Kotler & Armstrong)
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53. The Company
 It includes:
 Top management
 Finance, R&D, purchasing, operations and accounting
 Company’s mission, objectives, strategies and policies
 Resources, organizational structure
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54. Suppliers
 Suppliers form an important link in the company’s
overall customer value delivery system
 They provide the resources needed by the
company to produce goods and services
 Suppliers problem can seriously affect marketing
 Marketing managers must watch supply
availability – supply shortage or delays, labor
strikes etc.
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55. Suppliers
 Rising supply cost force to increase price that can
harm company’s sales volume, image, as well as
customer satisfaction
 Most marketers today treat their suppliers as
partners in creating and delivering customer value
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56. Marketing Intermediaries
 Marketing intermediaries help to the company to
promote, sale and distribute its goods to customers
 They includes:
 Resellers (wholesalers and retailers)
 Physical distribution firms (Transport and warehouse)
 Marketing service agencies (Research firms, ad
agencies, media, marketing consultants) and
 Financial intermediaries (Bank, insurance co.)
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57. Marketing Intermediaries
 Like suppliers, marketing intermediaries form an
important component of the company’s overall
value delivery system
 The company must partner effectively with
marketing intermediaries to optimize the
performance of entire system
 Thus, today’s marketers recognize the importance
of working with their intermediaries as partners
rather than simply as channels through which they
sell their products.
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58. Customers
 The company needs to study five types of
customers markets closely
 They are:
 Consumer markets (personal consumption)
 Business markets (production process)
 Reseller markets (to resell at profit)
 Government markets (public service)
 International markets (buyers in other countries
including consumers, producers, resellers and
governments)
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59. Competitors
 The marketing concept states that to be successful,
a company must provide greater customer value
and satisfaction than its competitors do.
 They must gain strategic advantage by positioning
their offerings strongly against competitors’
offerings in the mind of customer
 No single competitive marketing strategies is best
for all companies.
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60. Publics
 A public is any group that has an actual or
potential interest in or impact on an organizations
ability to achieve its objectives.
 Various types of publics are:
 Financial publics (bank, investment company, stock holders)
 Media publics (Radio, TV, newspaper, magazine)
 Government publics (product safety, packaging, truth in
advertising)
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61. Publics
 Citizen action publics (Consumer organizations,
environmental groups, minority groups)
 Local publics (Neighborhood residents, community organization)
 General publics (Laymen)
 Internal publics (Workers, managers, volunteers, BOD)
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62. Macro Environment
 Macro environment refers to all forces that are
part of the larger society and affects the micro
environment.
 It includes demography, economy, politics,
culture, technology, and natural forces. Macro
environment is less controllable.
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63. Macro Environment
 The large societal forces that affect the micro
environment –
 Demographic
 Economic
 Natural
 Technological
 Political and
 Cultural forces (Kotler & Armstrong)
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64. Demographic Environment
 Population size
 Population growth
 Age mix
 Migration
 Urbanization
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65. Economic Environment
 Economic system (Free market, centrally planned, & mixed
economy)
 Economic policies (Monetary, fiscal, & industrial policy)
 Economic condition (Income, business cycle, inflation, stage
of economic development)
 Globalization
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66. Socio-cultural Environment
 Social institution (family, reference group, opinion leader,
social class)
 Social change
 Life style
 Value and belief
 Religion
 Language
 Attitude
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67. Technological Environment
 Level of technology
 Pace of technological change
 Technology transfer
 Research and development
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68. Political-legal Environment
 Political system
 Political institution
 Government agencies
 Political philosophy
 Political stability
 Business law and court of laws
 Law administrators
 Power blocks
 Regional groups
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69. Natural Environment
 Natural Resources
 Location
 Topography
 Climate
 Natural calamities
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70. Environment Analysis
 Environmental analysis is a strategic tool.
 It is a process to identify all the external and
internal elements, which can affect the
organization's performance.
 The analysis entails assessing the level of threat or
opportunity the factors might present.
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71. Marketing Plan
 A Marketing plan is a written document that
summarizes what the marketer has learnt about the
market place and indicates how the firm plans to
reach its marketing objectives
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72. Contents of a Marketing Plam
– Executive summary and table of contents
– Situation analysis
– Objectives
– Marketing strategy
– Financial projections
– Implementation and control
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73. Any Queries?
Thank you
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