Introduction to Marketing Management
Exchange process: It occurs when the buyer with a demand and a seller with a product offering confront each other.
Marketing myopia: It refers to a short-sighted and inward looking approach to marketing that focuses more on the needs of the producer than the needs and wants of the consumers.
Marketing: 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.
Marketing orientation: It requires the firm to look for consumer needs and the necessity to search for new opportunities to satisfy the consumers in a better way than the competitor.
Needs: A condition or situation in which something is required.
Production concept: A concept that assumes that customers will choose products and services that are widely available and are of low cost.
Product concept: A concept based on the proposition that consumers will favour those products that offer the most attributes like quality, performance, and other innovative features.
Selling concept: A concept that proposes that customers will not buy enough of the organisation’s products unless they are persuaded through selling efforts
- Marketing is a social activity directed towards satisfying customer needs and wants through an exchange process.
- The five core concepts of marketing are: Needs, wants, and demand, Product and services, Exchange process, Customer value and satisfaction, and Markets
- The main functions of marketing are advertising, sales promotion, market research, and sales planning. Marketing is not only important for a company but also for consumers and the economy. It attempts to improve standard of living through better product and service offers.
- Marketing, as a concept, has evolved over a period of time and has witnessed changes and modifications with the progress of civilization. There are five concepts that explain this change and offer ways to companies on how to conduct their activities. They are production concept, product concept, selling concept, marketing concept, and societal marketing concept.
The Marketing Process
Marketing audit: It refers to the analysis and evaluation of a firm’s marketing approach, activities, aims, and results achieved.
Marketing control: The process by which managers ensure that the planned activities are completely and properly executed.
Marketing implementation: It requires organising and coordinating people, resources, and activities.
Marketing mix: A planned mix of the controllable elements of a product’s marketing plan commonly termed as 4Ps – product, price, place, and promotion.
Marketing plan: It is a written document that details the necessary actions to achieve one or more marketing objectives.
Quality Function Development (QFD): QFD is applied in the early stages of the design phase so that the customers’ wants are incorporated into the final product.
Return On Quality (ROQ): ROQ assumes that there is a trade-off between the costs and benefits of improving quality. The optimum quality level of products and services maximises profits rather than maximising quality.
Strategic business unit: An autonomous division or organisational unit, small enough to be flexible and large enough to exercise control over most of the factors affecting its long-term performance.
- Marketing mix is a model of crafting and implementing marketing strategies. It represents controllable tactical elements. The most popular classification of marketing mix includes product, price, place (distribution), and promotion.
- The four traditional Ps of the marketing mix are adequate for marketing a product but they are not enough to market a service.
- For services marketing, strategists have suggested an extended mix which includes people, process, and physical evidence, in addition to the four Ps.
- Marketing planning is a forward-looking exercise, which determines the future strategies of an organisation with special reference to its product development, market development, channel design, sales promotion, profitability, etc.
- Marketing implementation is an important function of marketing management process. Companies follow two major approaches to ensure proper strategy implementation. These are internal marketing and total quality management.
- Marketing control involves establishment of performance standards, evaluation of performance against laid down standards, and taking corrective and timely action to reduce discrepancies between desired and actual performance. Performance standards refer to expected levels of performance against which performance can be compared.
- Control involves evaluation and effectiveness of marketing strategies, sales analysis, marketing cost analysis, and marketing audits.
A marketing manager is required to observe and monitor the trend in the external environment and incorporate the results of this observation in business and marketing plans.
Environmental scanning helps a marketing manager in analysing the components of the company’s environment.
Observation and evaluation of marketing environment helps the marketing manager to identify opportunities and threats involved in the business and helps in designing suitable marketing responses.
Analysing the micro environment is very important for businesses that include their suppliers, intermediaries, customers, shareholders, and competitors.
Macro environmental factors are grouped as demographical, cultural, social, legal and political, economic, natural, and technological environment.
Two common environment scanning techniques used by the companies are Delphi technique and scenario building technique.
Actors: Players of micro environment who have a direct bearing on the marketing decisions.
Business cycle: A predictable long-term pattern of irregular periods of economic growth and decline that is characterised by changing employment, industrial productivity, and interest rates.
Cultural environment: It is everything that is socially learned and shared by the members of the society. It consists of material artefacts and nonmaterial components.
Country market: It is the sum total of some sub-markets identified more closely with the ethnic and language based classifications.
Demographic environment: It includes the population and its characteristics.
Delphi technique: A forecasting procedure in which a series of questions and the resulting feedback are used to reach a group consensus.
Environment scanning: It refers to careful monitoring of an organisation’s internal and external environments for detecting early signs of opportunities and threats that may influence its current and future plans.
Economic environment: All those macro economic factors like income distribution, level of saving, debt and credit available to consumers, and stages in business cycle.
Inflation: The overall general upward price movement of goods and services in an economy.
Marketing environment: Refers to all the forces outside marketing that affect marketing management’s ability to build and maintain successful relationships with the target customers.
Baby boomers are the demographic group born during the post–World War II baby boom, approximately between the years 1946 and 1964. This includes people who are between 53 and 71 years old in 2017, according to the U.S. Census Bureau.
The PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit. The PEST analysis headings are a framework for reviewing a situation, and can also, like SWOT analysis, and Porter’s Five Forces model, be used to review a strategy or position, direction of a company, a marketing proposition, or idea.
Porter’s five forces
- Existing competitive rivalry between suppliers
- Threat of new market entrants
- Bargaining power of buyers
- Power of suppliers
- Threat of substitute products (including technology change)
What is a ‘Marketing Mix’
A marketing mix usually refers to E. Jerome McCarthy’s four P classifications for developing an effective marketing strategy: product, price, placement, or distribution, and promotion. When it is a consumer-centric marketing mix, it is extended to include three more Ps: people, process and physical evidence, and three Cs: cost, consumer and competitor. Depending on the industry and the target of the marketing plan, marketing managers may take various approaches to each of the four Ps.
BREAKING DOWN ‘Marketing Mix’
The term “marketing mix,” was first coined by Neil Borden, the president of the American Marketing Association in 1953. It is still used in 2016 to make important decisions that lead to the execution of a marketing plan. A marketing mix helps an organization make strategic decisions when launching a new or existing product. The various approaches have evolved over time, especially with the increased use of technology.
Understanding the Marketing Information Systems (MIS)
- Marketing success depends on making correct and timely decisions.
- Marketing managers need reliable and timely information about a large number of external and internal factors relevant to decision areas. Practically every decision area relevant to marketing requires the input of information.
- The term ‘Marketing Information Systems’ refers to a programme for managing and organising information gathered by an organisation from various internal and external sources. Its focus is on data storage, classification, and retrieval.
- Marketing research is a growing and widely used business activity, because a manufacturer needs to know more about his final consumers. The goal of marketing is to attract new customers by promising superior value and to: keep and grow current customers by delivering satisfaction.
- The marketing manager, using a variety of sources, obtains many types of information on which to base his/her decisions. Certain data, such as daily sales figures and monthly or quarterly totals are continuously and regularly supplied. Other information such as consumer survey results is generated only on special request. Other information, perhaps informally gathered competitive information, comes to the manager on an unscheduled basis.
Descriptive studies: In such studies, information is collected from a representative sample of respondents and the information collected is analysed by using statistical methods.
Exploratory research: This includes the discovering of general nature of the problem and to correctly understand the involved variables.
Exploratory research: This is the preliminary investigation of a marketing problem and is undertaken in order to understand and identify the problem.
Focus group: Focus group is a popular technique for exploratory research and brings together about eight to ten people with similar backgrounds to meet a moderator/analyst for a group discussion.
Marketing Information Systems (MIS): MIS is a programme for managing and organising information gathered by an organisation from various internal and external sources.
Primary research: Original research done by individuals or organisations to meet specific objectives is called primary research.
Research: Systematic and objective investigation of a subject or problem to discover relevant information for principles.
Secondary data: Secondary data is any information originally generated for some other purpose rather than the current problem under consideration and can be either internal or external to the organisation.
Durability-the amount of use one gets from a product before it must be replaced
Reliability-the probability of a product failing within a specific time period
The primary operating characteristics or benefits of a product
Segmentation, Targeting and Positioning
Behavioural segmentation: In behavioural segmentation, buyers are divided into groups on the basis of their knowledge or attitude towards the use of a product or response to a product.
Concentrated marketing: It is a market coverage strategy in which company follows ‘one product-one segment’ principle.
Demographic segmentation: In demographic segmentation, the market is divided into groups based on variables such as age, family size, family, etc.
Differentiated marketing: It is a market coverage strategy in which the company goes for proper market segmentation as depicted by its analysis of the total market.
Geographic segmentation: In this type of segmentation, the market is divided into different geographical units such as nations, states, regions, cities, or neighbourhoods.
Market segmentation: It is the process of dividing a potential market into distinct sub-markets of consumers with common needs and characteristics.
Positioning: It is a process of creating an image of goods and services in
the consumers’ mind.
Psychographic segmentation: In psychographic segmentation, buyers are classified into different groups on the basis of lifestyle or personality and values.
Target marketing: IItt involves breaking a market into segments and then concentrating the marketing efforts on one or a few key segments.
Undifferentiated marketing: It is a market coverage strategy in which the company treats the target market as one and does not consider the market segments that exhibit uncommon needs.
Different types of standard: Fixed standards; Variable standards; Analytical standards
Generate items for a performance scale
Describe the general nature of performance
Specify what exactly is being evaluated
The 4 Cs are: Convenience; Cost to the user; Communication; Customer motivation
- Segmentation is a scientific process in which the marketing manager identifies the bases or variables on which the market is to be divided, forms segments, profiles them, and then launches marketing programmes for each segment.
- Requisites of effective market segmentation include identity, accessibility, responsiveness, size, measurability, and nature of demand.
- The marketing manager follows four-step process for segmenting the market – form the segments, profile the segments, evaluate the segments, and target market selection.
- There are a few common bases, which are used in segmentation e.g.,demographic, economic, psychographics, etc.
- Marketers use three strategic options in target marketing. They are undifferentiated marketing, differentiated marketing, and concentrated marketing. Once the segment is identified and target market decision is made, the marketer needs to position the offer in the market.
- Positioning is an act of designing the company’s product offering and image to occupy a distinctive place on relevant dimensions in the minds of customers.
A newer version of the marketing mix is:
Create/Configure Value; Communicate Value and Deliver Value.