1. MARKETING MANAGEMENT
Unit-1
Defining Marketing
for the
21st Century

2. MARKETING MANAGEMENT
In this chapter we will address the following
questions:
 What is the new economy like?
 What are the tasks of marketing?
 What are the major concepts and tools of
marketing?
 What orientations do companies exhibit in the
marketplace?
 How are companies responding to the
new challenges?

3. Old Economy VS New Economy
The old economy is based on the Industrial
Revolution and on managing manufacturing
industries
WHILE …
The new economy is based on the Digital
Revolution and the management of
information.

4. The New Economy placed the following
capabilities in the hands of consumer:
 Substantial increase in buying power
 Greater variety of available goods and services
 Great amount of information about practically
anything
 Greater ease in interacting and placing and receiving
orders
 An ability to compare notes on products and
services

5. AND placed the following capabilities in the hands of
companies:
Operate powerful new information and sales channels
 Collect richer information about markets, customers,
prospects, and competitors
 Speed up internal communication among employees
 Have two-way communications with customers and
prospects
 Send promotional tools easily and quickly
 Able to customize offerings
 Improve purchasing, recruiting, training and internal
and external communication.
 Maintain cost saving while improving accuracy and
service quality.

6. Marketing and Exchange
• What is marketing?
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 objectives

7. Selling is only the tip of the iceberg
“There will always be need for
some selling. But the aim of marketing
is to make selling superfluous. The aim
of marketing is to know and understand
the customer so well that the product or
service fits him and sells itself. Ideally,
marketing should result in a customer
who is ready to buy. All that should be
needed is to make the product or
service available.”
Peter Drucker

8. Selling (Old concept) Marketing (Modern concept)
1. Product enjoys the supreme
importance.
2. Emphasis is on corporate objectives
and needs.
3. Company-oriented selling efforts.
4. Goods are already produced and
management sells them on profit
through intensive advertising.
5. Selling aims at short-term
objectives as it is only a tactical and
routine activity.
6. Top priority is given to sales volume
maximization leading to profit
maximization.
1. Customer enjoys the unique
importance.
2. Emphasis is on customer’s needs
3. Market-oriented selling efforts.
4. Customer’s demand determines
production.
5. Marketing aims at long-term
objectives. It has philosophical
and strategic implications.
6. Top priority is given to profitable
volume of sales and market
share at fair prices and
reasonable risk.
Distinction between Marketing and Selling

9. Definition:
“Marketing Management is the process of ascertaining consumer needs, converting
them into products or services to the final consumer or user to satisfy such needs and wants
of specific customer segment or segments with emphasis on profitability ensuring the
optimum of the services available to the organization.” - Dr. Rustom S. Davar
Definition:
“Sales Management is planning, direction and control of selling activities of a business
unit including recruiting, selecting, training, equipping, assigning, routing, supervising,
paying and motivating as these tasks apply to the sales force”. - American
Marketing Association
{Practically marketer has to do FAB (Features, Advantages and Benefits) analysis and sell,
which is easier and effectual for results}

10. What is Exchanged in Marketing?
Goods
Services
Events & Experiences
Persons
Places & Properties
Organizations
Information
Ideas

11. 4 Types of Markets
1. Consumer Market: (consumption)
2. Business Markets: (saving/resell)
3. Global Markets: (different offering mix)
4. Nonprofit and Governmental Market: (bids)

12. Marketing Concepts and Tools
 Market: a collection of buyers and sellers
 Marketplace: a physical market (store)
 Marketspace: a digital market (Internet: e.g., www.secondlife.com)
 Metamarket: markets involving closely-related products and services (e.g.,
www.edmunds.com)
 Marketer and Prospect: A marketer is someone seeking a response from another
party, called the prospect.

13. A Simple Marketing System

14. Structure of Flows in a Modern Exchange
Economy

15. Marketing Concepts and Tools
 Needs: the basic human requirements
 Wants: specific objects that might satisfy the need
 Demand: wants for specific products backed by an ability to pay.
Examples:
An American needs food but wants a hamburger, French fries and soft drink.
Many people want a Mercedes, only a few are able and willing to buy one.

16. Marketing Debate
Does Marketers Create or
Satisfy Needs?

17. Marketing Concepts and Tools
 Product: a value proposition
 Offering: intangible value proposition (a combination of products, services,
information and experiences (Volvo)
 Brand: is an offering from a know source
Examples:
McDonald
Lexus

18. Only the best is good enough for Lexus customers

19. Marketing Concepts and Tools
Value is a ratio between what customer gets and what he gives
Value = Benefits/Costs
How to increase value?
Raise benefits
Reduce costs
Raise benefits and reduce costs
Raise benefits by more than the raise of costs
Lower benefits by less than the reduction of costs

20. Marketing Concepts and Tools
 Exchange: a process of obtaining a product/service from someone by offering
something
For exchange to occur, there must be:
• Two parties
• Each with something of value to the other
• Capable of communication and delivery
• Free to accept/reject the offer
• Agreement to terms
Example: Caterpillar

21. Marketing Concepts and Tools
 Transaction: a trade of values between two or more parties.
Does Transaction differs from
Transfer

22. Marketing Concepts and Tools
 Relationship: building mutually satisfying long-term relations with key parties
(customers, suppliers, distributor) in order to earn and retain their business.
 Network: building mutually profitable business relationships between the company
and its supporting stakeholders.

23. Marketing Concepts and Tools
 Marketing channels: a way/mean to reach target market.
Three kinds of marketing channels:
Communication channels
Distribution channels
Service channels

24. Marketing Concepts and Tools
 Supply Chain: longer channel stretching from raw materials to components to final
products that are carried to final buyers.
 Competition: all actual and potential rival offerings and substitutes that a buyer
might consider.

25. Marketing Concepts and Tools
Four (4) levels of competition:
1. Brand competition: A company sees its competitors as other
companies offering similar products and services to the same
customers at similar prices.
2. Industry competition: A company sees its competitors as all
companies making the same product or class of products.
3. Form competition: A company sees its competitors as all
companies manufacturing products that supply the same
services.
4. Generic competition: A company sees its competitors as all
companies that compete for the same consumer dollars.
(Example: Volkswagen)

26. Marketing Concepts and Tools
 Marketing Environment: actors that impact the company’s offerings (task & broad
environment).
 Marketing Program: a numerous decisions on the mix of marketing tools to use.
 Marketing Mix: a set of marketing tools the firm uses to pursue its marketing
objectives in the target market.

27. The Four Ps

28. The Four Ps
The Four Cs
Product
Price Promotion
Place
Customer
Solution
Communication
Conven-
ience
Marketing
Mix

29. Marketing-Mix Strategy

30. Marketing Management
•Marketing Management (Kotler):
is the analysis, planning, implementation, and control
of marketing programs designed to create, build, and
maintain mutually beneficial exchanges and
relationships with target markets for the purpose of
achieving organizational objectives.

31. Company Orientations to the Marketplace (Marketing
Management Philosophies)
1. Production concept: assumes consumers favor those products that
are widely available and affordable. (Focus: wide distribution; high
volume).
2. Product concept: assumes consumers will favor those products that
offer the most quality, performance, and features. (Focus: Superior
product)

32. Company Orientations to the Marketplace,
cont.
3. Selling concept: assumes that consumers will either buy or not
enough of the organizations’ products unless the organization makes
a substantial effort to stimulate the customer’s interest in the
product. (Focus: needs of the seller)
The purpose of marketing
is to sell more stuff to
more people more often
for more money in order
to make more profit
Coca-Cola’s former
Vice president

33. Company Orientations to the Marketplace,
cont.
4. Marketing concept: holds that the key to achieving organizational goals
consists in determining the needs and wants of target markets and
delivering the desired satisfactions more effectively and efficiently than
competitors. (Focus: different needs of buyers)

34. Marketing and Selling Concepts
Contrasted
Factory Products
Selling
and
Promoting
e.g., Profits
through
Volume
(a) The Selling Concept
Starting
Point
Focus Means Example Ends
Market
Customer
Needs
Integrated
Marketing
e.g., Profits
through
Satisfaction
(b) The Marketing Concept

35. Theodore Levitt’s “Marketing Myopia,” cont.
•What is the difference between marketing and selling?
•“The difference between marketing and selling is more than semantic.
Selling focuses on the needs of the seller, marketing on the needs of the buyer.
Selling is preoccupied with the seller’s need to convert the product into cash;
marketing with the idea of satisfying the need of the customer ….”

36. Marketing Concept Four Pillar
1. Target Market: tailored marketing programs
2. Customer Needs:
 Giving customer what they need is not enough; companies must help
customers learn what they want.
 Stated, Real, Unstated, Delight & Secret Needs. (Inexpensive car
example)
 Responsive, Anticipated & Creative Marketer.
 Market-driving firm VS Market-driven firm.
 Make and sell VS Sense and respond Philosophy.
 Why it’s important to satisfy target customers? (Customer retention)

37. Marketing Concept Four Pillar
3. Integrated Marketing: all company’s departments work together to serve
the customer’s interests.
a. External marketing:
directed at people outside the company.
b. Internal marketing:
the task of hiring, training, and motivating able employees
who want to serve customers well.
Which one is more important?
4. Profitability

38. Traditional Organization Chart
Customers
Front-line people
Middle Management
Top
Management

39. Modern Customer-Oriented Organization Chart
Customers
Front-line people
Middle management
Top
manage-
ment

40. What makes companies adopt marketing
concept?
1. Sales decline
2. Slow growth
3. Changing buying patterns
4. Increasing competition
5. Increasing marketing expenditures

41. Company Orientations to the Marketplace,
cont.
5. The customer concept:
• Customer is the lifeblood of any company
• Customer is the King

42. The Customer Concept

43. Company Orientations to the Marketplace,
cont.
6. The societal marketing concept: to determine the needs, wants, and
interests of target markets and to deliver the desired satisfaction
more effectively and efficiently than competitors in a way that
preserves or enhances the consumer’s and the society’s well-being.

44. Societal Marketing Concept
Dalrymple & Parsons/Marketing
Management 7th edition: Chapter 1
16
Marketing Managers Must
Marketing Managers Must
Balance
Balance
Promote sale of
goods and services
Long-term needs for a
safe and healthy
environment
Profits
Public
Interest

45. How are companies responding to the
new challenges?
1. Reengineering
2. Outsourcing
3. E-Commerce
4. Benchmarking
5. Alliances
6. Partner-Suppliers
7. Market-central
8. Global and local
9. Decentralization

46. Developing the Marketing Mix Program
• Product
• Price
• Place (Marketing Channels)
• Promotion
Selecting the target market and designing the marketing mix go hand-in-
hand

47. Extended- Marketing Mix

49. 7Ps & 7Cs
The 7 Ps The 7 Cs
Organisation Facing Customer Facing
Product = Customer/ Consumer
Price = Cost
Place = Convenience
Promotion = Communication
People = Caring
Processes = Co-ordinated
Physical Evidence = Confirmation

50. Marketing Management
MARKETING ENVIRONMENT

51. Definition
“A company’s marketing environment consists of the actors and forces
outside marketing that affect management’s ability to build and
maintain successful relationships with target customers.” ---- Philip
Kotler

52. Definition and Concepts
• The microenvironment consists of the following actors close
to the company that affect its ability to serve its customers:
(1) The company (2) The suppliers (3) The marketing
intermediaries (4) The customer markets (5) The competitors
(6) The public.
• The macro environment consists of the following larger
societal forces that affect the microenvironment: PESTEL
(1) Political (2) Economic (3) Demographic /Socio-
Cultural
(4) Technological (5) Political (6) Legal (7) Ecological/
Natural

53. Microenvironment Macro environment

54. Opportunities
Examples of Opportunities Posed by Marketing Environment in India
1. The New Economic Policies of the Government of India in general.
2. The New Industrial Policy.
3. Liberalisation of industrial licensing.
4. Foreign Exchange Regulation Act (FERA) and Monopolies and Restrictive Trade
Practices Act (MRTP) liberalization.
5. Curtailment of and disinvestments in public sector.
6. The New Trade Policy – lowering of import tariffs, abolition of import licenses,
convertibility of rupee, globalisation, etc.
7. Fiscal and monetary reforms, banking sector reforms, capital market reforms.
8. Removal or phasing out of subsidies.
9. Encouragement to foreign direct investment (FDI).
10. Dismantling of price controls and introduction of market-driven price
environment.

55. Threats
Examples of Threats Posed By Marketing Environment In India
1. Entry of Multi-National Companies (MNCs) into the Indian market on a large
scale increases the competition for products and services.
2. ‘Survival of the fittest’ rule forces many weaker and small-scale companies to
close down due to non-viability.
3. Big players start buying smaller players through mergers and acquisitions.
4. Removal of subsidy affects profitability and viability of many industries.
(Fertiliser industry is one such affected sector where units had to close down
or stop products of certain products).
5. Banks and insurance sector came under competitive environment and were
compelled to operate viably, at par with the private sector.
6. In general, many industrial units across India faced a destabilization
consequent to the economic reforms. Their markets, market shares and profits
came under severe pressure and viability became a big question.

56. Marketing Environment
Company
Demographic
Economic
Natural
Technological
Political
Cultural
Company
Customers
Intermediaries
Suppliers
Competitors
Publics

57. • Internal environment (SW)
• External environment (OT)
• SWOT analysis (Strength, Weakness, Opportunity, Threat) –
TOWS Matrix
• PESTLE analysis

58. SWOT Analysis ….

59. The Micro Environment
Company
Customers
Publics Suppliers
Competitors Intermediaries
Forces Affecting a
Company’s Ability to
Serve
Customers

60. Customer Markets
Company
Consumer
Markets
International
Markets
Government
Markets
Business
Markets
Reseller
Markets

61. The Macro Environment
Demographic
Technological
Cultural Economic
Political Natural
Forces that Shape
Opportunities
and Pose Threats
to a Company

62. PEST(LE) Analysis
•Political factors
•Economic factors
•Socio-cultural factors
•Technological factors
•Legal factors
•Ecological factors

63. Political Environment
Greater
Concern for
Ethics
Increased
Legislation
Changing
Enforcement
Key
Trends in the
Political
Environment

64. Economic Environment
Changes
in Consumer
Spending
Patterns
Economic
Development
Changes
in Income
Key
Economic
Concerns for
Marketers

65. Economic factors
•Inflation
•Employment
•Disposable income
•Business cycles
•Energy availability and cost

66. Cultural Environment
Of
Organizations
Of
Nature
Of
Oneself
Of
Society
Of
the Universe
Of
Others
Views
That Express
Values

67. Socio-Cultural factors
•Demographics
•Distribution of income
•Social mobility
•Lifestyle changes
•Consumerism
•Levels of education

68. Natural Environment
Factors
Affecting
the
Natural
Environment
More Government
Intervention
Shortages of
Raw Material
Increased Costs
of Energy
Higher Pollution
Levels

69. Ecological Environment
•Environmental Management Perspective
–Taking a proactive approach to managing
the micro environment and the macro
environment to affect changes that are
favorable for the company.
–How?
–Hire lobbyists, run “advertorials”, file
law suits and complaints, and form
agreements.

70. SEGMENTATION PROCESS

71. Positioning through marketing mix strategies
Selecting market to target
Determining market segmentation
Identify markets with unfulfilled needs
Selecting a target market(s)
Determining market segmentation
Identifying markets with unfulfilled needs
Steps in Market Segmentation, Targeting, and Positioning
© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

72. Selecting & Relating to Customers
• Identify factors to segment
market
• Determine potential of each
segment
Objective: identify &
understand customer
characteristics
Segmentation

73. Identifying Markets
•What is a market? PEOPLE
BUT - not just ANY people, they have to have
• Willingness to buy
• Purchasing power (money)
• Authority to buy, a specific product
•Consumer Markets and Industrial Markets

74. Bases for Market Segmentation

80. Reasons to Use Market Segmentation
Reasons why firms segment markets

83. The main criteria for evaluating market
segments

86. What is Benefit Segmentation?

87. As implied by the name, benefit segmentation is
splitting up the market based upon the key benefits and
needs sought by purchasing consumers. As a result,
benefit segmentation is a very consumer-centric
approach as it identifies the core product needs of the
consumers.

89. Selecting & Relating to Customers
• Criteria for selection
• Segment strategy
Objective: Selecting
customers & allocating
resources
Segmentation
Target Marketing

90. Selecting a Target Market
Determining which segments to target
•Sales potential
•Growth opportunities
•Competition
•Ability to serve the segment

91. Target Marketing Strategies
• Mass Market
• One size fits all
 Well defined mkts
 Different approach for each
 Single mkt
 One approach
Undifferentiated Differentiated Concentrated

92. Selecting & Relating to Customers
• Understand customers
• Determine image
Objective: Establish positive
image relative to
competitors
Segmentation
Target Marketing
Positioning

93. Positioning
Creating a product image
or identity in the minds of
their target market relative
to competitive products.

94. Develop Product Positioning

95. Simple Preparation
Involved Preparation
Healthy Unhealthy
Beef
Pork
Tuna
Chicken
Turkey
Fresh Fish
Bacon
Hot Dogs
Develop Product Positioning contd...

96. How do these ads demonstrate that the companies understand the customer?

97. Which segmentation
variable is employed in this
ad?
Within that variable, which
category does the ad target.