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Marketing Management I Assessment Weightage Criteria Marks/Weightage Session OLT 10 7 Comprehensive Voce Coursework/ Project Viva 10 Preceding week of End Term Exam 20 9 Case Study/ Mid Term 10 Exam 4 End Term Exam 50% End of Trimester Total 100% Marketing and Kipling ???????? I have six honest serving men They taught me all I knew I call them Why and When and Where And How and What and Who Marketing • • • • • • • • What is Marketing ???? Is it Selling ? Is it Advertising ? Is it Pricing ? Is it retailing or wholesaling ? Is it e- business ? Is it ????? Is it a Department ? Definitions of Marketing • “Marketing is selling goods that don’t come back to people that do.” • “Marketing is about being best at something important to your customer.” • “Meeting needs profitably” • “Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably”. (Chartered Institute of Marketing) • Marketing is the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients , partners and society at large, ( American Marketing Association) Kotler’s social definition “Marketing is a societal process through 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 defined • In a narrower practical business context : Marketing involves building profitable, valueladen exchange relationships with customers. • “Marketing is the process by which companies create value for customers and build strong customer relationships in order to capture value from customers in return”. Marketing Process Selling Vs Marketing • Selling is getting rid off something you’ve got. • Marketing is having something that you can get rid off. • In a selling orientation a company emphasizes its products/technology with the main objective of maximizing sales. • A marketing orientation begins with needs of the prospective users of a product or technology, details of the product designed are driven by the customer’s requirements. • Profits will result by having satisfied customers. Launches based on Marketing homework : Meeting Customer needs • Nintendo designing Wii game system (Nintendo states that its console targets a broader demographic than that of its competitors). • Canon launching ELPH Digital cameras. (Canon's highend PowerShot digital cameras incorporate the creative performance of a professional digital SLR camera and the compact convenience of a point-and-shoot.) • Toyota Prius hybrid automobile . • Prius is the world’s most iconic hybrid, combining incredible aerodynamic efficiency with unmistakable styling. • Almost every inch of the body of Prius was designed with a purpose: cheating the wind. Flowing lines and purposeful edge detailing conspire to reduce wind resistance for a quieter ride and greater fuel efficiency. The Marketing Concept • A philosophy of business maintaining that the satisfaction of customer needs and wants is the economic and social reason for a firm’s existence and that the firm should therefore direct its activities towards fulfilling those needs and wants, yielding at the same time, long-term profitability. Marketing-a frame of mind • Marketing is not to be thought of as the function of a particular office or department • It is an attitude of mind, an approach to business problems to be adopted by the whole organization from chief executive downwards. • Everyone in an organization should realize that without customers there is no business and hence no job. The customer in effect pays your salary. • Thus, all departments must work together as an integrated unit with a common purposesatisfying customer’s needs and wants The Big Picture The business enterprise has two and only two basic functions : Marketing and Innovation. Marketing and innovation produce results; all the rest are costs. ( Peter Drucker : The Practice of Management) Everybody is Marketing • Accounting – Develops a format customers can understand. • Finance - Gives customers flexible payment options • HR – When it takes out a Recruitment ad • Logistics team - Calling on a customer to coordinate supply chains • Operations - When the receptionist smiles at the customer during a hotelcheck -in A new automobile product • What goes into it ? • • • • • • Marketing Product Development Purchasing Finance Manufacturing External suppliers The customer receives the outcome of several cross – functional processes 3 mutually reinforcing changes Are enabling faster and more coherent coordination of value creating activities within organizations : • Companies are thinking in terms of processes rather than functions • Moving from hierarchies to teams • Towards Partnerships from arms – length transactions with suppliers and distributors Why is Marketing Important to you ? • Because……From your Nike shoes, to your Benetton T Shirt to the McDonalds Burger that you eat you have been successfully marketed a product. • Whether you drive a Wagon R , A Ritz or a Mercedes, you have been the end product of a marketing process • Marketing is apparent in every aspect of your life including the resume with which you market yourself to a prospective employer • Because…..you as a consumer pay for the cost of marketing activities. In advanced economies marketing costs 50 cents out of each consumer dollar. • Because….Marketing is often the route to the top in a career • Because… even non - marketing people work with marketers. • Because…marketing principles apply even to non profit organizations. • Because….marketing plays a large part in economic growth and development. 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 1-25 What is 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. 1-26 Challenges before CEOs Among the top 5 challenges faced by CEOs worldwide : • Sustained and steady top line growth • Customer loyalty/Retention Both are largely dependent on Marketing CEOs recognize The importance of Marketing in building brands and a loyal customer base, intangible assets that make up a large percentage of the value of a firm The permanent challenge is : Change Re – thinking business models “Change or die” WHAT IS MARKETED? What is Marketed? Goods Services Events & Experiences Persons Places & Properties Organizations Information Ideas 1-31 Definitions A Marketer is someone who seeks a response - Attention, a purchase, a vote a donation – from another party called the prospect Marketers are responsible for demand management. Demand can have several avatars • • • • • • • • Negative Non – existent Latent Declining Irregular Full Overfull Unwholesome Vaccination Insurance Policies Walkman VCRS, Pagers Hotel Rooms Ideal, seldom achieved Movie tickets Cigarettes, alcohol Marketer’s task To identify the cause of each demand state and try to shift it to a more favorable one Markets • A collection of buyers and sellers who transact over a particular product or product class ( eg. housing market, grain market) Flows in a Modern Exchange Economy Simple Marketing System Key Customer Markets Consumer Markets Global Markets Business Markets Nonprofit/ Government Markets 1-38 Consumer Markets • Companies selling mass consumer goods and services such as juices, cosmetics, athletic shoes, and air travel spend a great deal of time establishing a strong brand image • by developing a superior product and packaging, ensuring its availability, and backing it with engaging communications and reliable service. Global markets • Companies in the global marketplace must decide which countries to enter; • how to enter each (as an exporter, licenser, joint venture partner, contract manufacturer, or solo manufacturer); how to adapt product and service features to each country; how to price products in different countries; and how to design communications for different cultures. They face different requirements for buying and disposing of property; cultural, language, legal and political differences; and currency fluctuations. Yet, the payoff can be huge Nonprofit and Governmental Markets Companies selling to non - profit organizations with limited purchasing power such as churches, universities, charitable organizations, and government agencies need to price carefully. Lower selling prices affect the features and quality the seller can build into the offering. Much government purchasing calls for bids, and buyers often focus on practical solutions and favor the lowest bid in the absence of extenuating factors. Marketplaces, Marketspaces, Metamarkets The marketplace is physical – a store Marketspace is digital – shopping on the internet Metamarket is a cluster of complementary products and services closely related in the minds of customers but spread across a diverse set of industries –eg Financial services for loans to purchase cars, buyers and sellers web –sites for used cars Functions of CMOs • Strengthening the brands • Measuring marketing effectiveness • Driving new product development based on customer needs • Gathering meaningful customer insights • Utilizing new marketing technology. Stephen Ginns Core Marketing Concepts • Needs, wants, and demands • Target markets, positioning, segmentation • Offerings and brands Stephen Ginns • Value and satisfaction • Marketing channels • Supply chain • Competition • Marketing environment. Needs, wants, demands • Needs are basic human requirements –air, water, food , clothing etc. Also, recreation, education, entertainment Needs become wants when they are directed to specific objects that might satisfy the need. Thus quenching your thirst is a need .Having a Pepsi is a want Wants are shaped by society. • Marketers do not create needs. These preexist marketers. Marketers, along with other societal factors, influence wants. • Thus a Marketer can promote the idea of a BMW being a symbol of your having arrived. But he cannot create your need for social status. • Demands are wants for specific products backed by ability to pay. Thus willingness and ability to pay are what concerns a marketer. Understanding needs is not simple : I want it, I need it… 5 Types of Needs • • • • • Stated needs Real needs Unstated needs Delight needs Secret needs 1-50 Stated needs ( I want an inexpensive car) Real needs ( I want a car whose operating costs are low, not the initial cost of buying) Unstated needs ( I want good service from the dealer) Delight needs ( An onboard navigation system) Secret needs ( Friends should see me as a savvy consumer) Companies must help consumers learn what they want Target Markets, Positioning, Segmentation • To cater to different wants marketers divide markets into segments. • They identify and profile distinct groups of buyers who might prefer or require varying products and service mixes by looking at demographic, psychographic and behavioural differences among buyers Target markets • From among the identified segments the market/s with the greatest opportunity is /are chosen as the target market/s. • For each target market a firm develops a market offering ( a combination of product, services, information or experiences offered to a market to satisfy a need or a want). Positioning • The market offering is then positioned in the minds of the target buyers as delivering some central benefits. • Volvo - SAFETY • Scorpio - Luxury of a car plus thrill of a SUV • Pepsi - Fun “Nothing official about it” or the “Joy of Pepsi” • Volkswagen - Rational : Affordable and German engineered Emotional : A different driving experience Predictably.. Companies perform best when they choose their target markets carefully and prepare tailor -made marketing programmes Offerings and brands • Companies address needs by putting forth a value proposition or a set of benefits offered to customers to satisfy their needs. The value proposition is made tangible by the offering. Nokia “Connecting People” BMW “ The Ultimate Driving Machine Apple “ Touching is believing” • A brand is an offering from a known source. All companies strive to build a strong, favorable and unique brand image PEPSI POSITIONING • • • • • • 1939–1950: "Twice as Much for a Nickel 1950: "More Bounce to the Ounce“ 1950–1957: "Any Weather is Pepsi Weather“ 1957–1958: "Say Pepsi, Please“ 1958–1961: "Be Sociable, Have a Pepsi" 1961-1963: "Now It's Pepsi for Those Who Think Young" • 1963–1967: "Come Alive, You're in the Pepsi • Generation" (jingle sung by Joanie Sommers) • 1967–1969: "(Taste that beats the others cold) Pepsi Pours It On". • 1969–1975: "You've Got a Lot to Live, and Pepsi's Got a Lot to Give" • 1975–1977: "Have a Pepsi Day“ • 1977–1980: "Join the Pepsi People (Feeling Free)" • 1983: "It's cheaper than Coke!" • 1983–1984: "Pepsi Now! Take the Challenge!“ • 1984–1991: "Pepsi. The Choice of a New Generation" (commercial with Michael Jackson and The Jacksons, featuring Pepsi version of Billie Jean) • 1984-1988: "Diet Pepsi. The Choice of a New Generation" • 1988-1989: "Diet Pepsi. The Taste That's Generations Ahead" • 1989-1990: "Diet Pepsi. The Right One" • 1989-1992: "Diet Pepsi. The Taste That Beats Diet Coke" • 1986–1987: "We've Got The Taste" (commercial with Tina Turner) • 1987–1990: "Pepsi's Cool" (commercial with Michael Jackson, featuring Pepsi version of Bad) • 1990–1991: "You got the right one Baby UH HUH" (sung by Ray Charles for Diet Pepsi) • 1990–1991: "Yehi hai right choice Baby UH HUH" (Hindi - meaning "This is the right choice Baby UH HUH") (India) • 1991–1992: "Gotta Have It"/"Chill Out" • 1992–1993: "Be Young, Have Fun, Drink Pepsi“ • 1993–1994: "Right Now" Van Halen song for the Crystal Pepsi advertisement. • 1994–1995: "Double Dutch Bus" (Pepsi song sung by Brad Bentz) 1995: "Nothing Else is a Pepsi" • 1995–1996: "Drink Pepsi. Get Stuff." Pepsi Stuff campaign • 1996–1997: "Pepsi: There's nothing official about it" (During the Wills World Cup (cricket) held in India/Pakistan/Sri Lanka) • 1997–1998: "Generation Next" - with the Spice Girls. • 1998–1999: "It's the cola" (100th anniversary commercial) 1999–2000: "For Those Who Think Young"/"The Joy of Pepsi-Cola" (commercial with Britney Spears/commercial with Mary J. Blige) • 1999-2006: "Yeh dil maange more" (Hindi meaning "This heart asks for more") (India) • 2003: "It's the Cola"/"Dare for More" (Pepsi Commercial) • 2006–2007: "Why You Doggin' Me"/"Taste the one that's forever young" Commercial featuring Mary J. Blige • 2007–2008: "More Happy"/"Taste the once that's forever young" (Michael Alexander) • 2008: "Pepsi Stuff" Super Bowl Commercial (Justin Timberlake) • 2008: "Рepsi is #1" Тv commercial (Luke Rosin) • 2008–present: "Something for Everyone." 2009–present: "Refresh Everything"/"Every Generation Refreshes The World" • 2009–present: "Yeh hai youngistaan meri jaan" (Hindi - meaning "This is our young country my baby") (India) • 2009–present: "My Pepsi My Way"(India) • 2009–present: "Refresca tu Mundo" (Spanish meaning "Refresh your world") (Spanish Spoken countries in Latin America) • 2010: "Every Pepsi refreshes the world." • 2011–present: ”Summer Time is Pepsi Time” 2011–present: ”Born in the Carolinas” • 2012: ”Where there’s Pepsi, there’s music” – used for the 2012 Super Bowl commercial 2012: ”Live For Now” 2012: ”Change The Game” • 2012: “The Best Drink Created Worldwide” • 2013 : “Oh yes abhi !” Value • Value reflects the sum of the perceived tangibles and intangible benefits and costs to customers. • Value is primarily a combination of : Quality, service and price – “The customer value triad” Value Marketing is the identification, creation, communication, delivery and monitoring of customer value Satisfaction • A person’s judgement of a product’s perceived performance ( or outcome) in relation to expectations. Marketing channels • Communication channels ( newspapers, magazines, radio, TV, billboards, posters, fliers, internet, emails,blogs) • Distribution channels ( distributors, wholesalers, retailers, agents) • Service channels ( warehouse, transporters, banks , insurance companies) Supply Chain • The supply chain stretches from raw materials to components to final products carried to final buyers. • Each company captures only a certain percentage of the total value generated by the supply’s chain’s value delivery system. • Every expansion of a company upstream or downstream is an attempt to capture a higher percentage of supply chain value A simple supply chain Competition • All actual and potential rival offerings and substitutes a buyer might consider. • Eg an automobile company planning to buy steel for its cars. Can buy steel from SAIL, or Tata Steel or import from abroad or substitute other parts for steel. Hence Tata Steel should think of all these possibilities as competition not only integrated steel companies Marketing Environment • Task Environment includes all the actors engaged in producing, distributing and promoting the offering. • Broad environment : Demographic, Economic, Physical, Technological, Political – Legal, Social – Cultural. The savvy marketer is constantly scanning these environments for trends and adjusting his marketing strategy accordingly The marketplace isn’t what it used to be… Changing technology Globalization Deregulation Privatization Empowerment Customization Convergence Disintermediation 1-74 New Consumer Capabilities • A substantial increase in buying power • A greater variety of available goods and services • A 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 • An amplified voice to influence public opinion. Stephen Ginns New company capabilities • Internet to augment their reach • Fuller information and data gathering • Faster internal communication through intranet • Faster external communication among customers by creating on line and off line buzz through brand advocates and user communities • Target marketing and two way communication • Marketers can send ads, coupons, samples and information to customers who have requested this. • Mobile marketing • Customized goods • Corporate blogging to communicate with the public, customers and employees • Price comparisons before purchase • Online recruitment, training etc. Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Production concept Product concept Copyright ©2014 by Pearson Education, Inc. All rights reserved Selling concept Marketing concept Societal concept Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Production concept: Consumers will favor products that are available and highly affordable Copyright ©2014 by Pearson Education, Inc. All rights reserved Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Product concept: Consumers favor products that offer the most quality, performance, and features Focus is on continuous product improvements Copyright ©2014 by Pearson Education, Inc. All rights reserved Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Selling concept: Consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort Copyright ©2014 by Pearson Education, Inc. All rights reserved Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Marketing concept: Knowing the needs and wants of the target markets and delivering the desired satisfactions better than competitors do Copyright ©2014 by Pearson Education, Inc. All rights reserved Designing a Customer-Driven Marketing Strategy Marketing Management Orientations Societal marketing: Make good marketing decisions by considering: consumers’ wants and long-term interests, company’s requirements, society’s long-run interests Copyright ©2014 by Pearson Education, Inc. All rights reserved • Production concept : Oldest concept. The Philosophy : Consumers will prefer products that are widely available and inexpensive High production efficiencies, low costs and mass distribution are required. Still in use: Lenovo (PCs) and Haier ( Domestic appliances) in China where labour is plentiful and cheap. Also used when a company wants to extend its market. Product Concept : Philosophy : Consumers favour products that offer the most quality, performance or innovative features. The focus is on making better and better products and improving them over time. “ The better mouse trap” syndrome. ( Forgets that proper, pricing, distribution advertising and selling are required to make it successful) The Selling concept : Philosophy: Consumers and businesses if left alone won’t buy enough. Aggressive selling and promotion is required Used for unsought goods such as insurance, encyclopedias etc. Also, when there is over – capacity. ( Forgets that customers who have been bullied into buying can return and bad mouth it and complain to consumer organizations). • The Marketing concept .Philosophy: A customer – centred philosophy. Find the right products for your customers. • Selling focuses on the needs of the seller; marketing on the needs of the buyer. • The Marketing concept holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering and communicating superior customer value to your chosen target markets. The Holistic Marketing Concept goes beyond the Marketing concept. It is a more complete and cohesive approach which recognizes that “everything matters” in marketing. It attempts to recognize and reconcile the scope and complexities of marketing activities. Holistic Marketing Concept • Definition – development, design and implementation of marketing programs, processes and activities that recognizes the breadth and interdependencies of their efforts. 1-88 Internal Marketing • Ensures that everyone in the organization embraces marketing principles, especially senior management. • Internal marketing is the task of hiring, training and motivating able employees who want to serve customers well. • Works on two levels : across the marketing function and across all departments who must all “think customer”. Integrated Marketing • The marketer’s task is to devise marketing activities and assemble fully integrated marketing programmes to create, communicate and deliver value for consumers. Relationship Marketing • • • • Aims to build mutually satisfying long – term relationships with 4 key constituents in order to earn and retain their business. Customers Employees Marketing partners ( Channels, suppliers, distributors, dealers, agencies Financial community ( Shareholders, investors, analysts) Relationship marketing creates a marketing network. Based on the philosophy : Build an effective network of relationships with key stakeholders, profit will follow Performance Marketing The returns to the business from marketing activities and programmes, as well as addressing broader concerns and their legal, ethical, social and environmental effects. • Financial accountability as well as Social responsibility marketing The Societal Marketing Concept • The Societal marketing concept calls upon marketers to build social and ethical considerations into their marketing practices. • The Societal Marketing concept holds that the organization’s task is to determine the needs, wants and interests of target markets and to deliver the desire satisfactions more effectively and efficiently than competitors in away that preserves or enhances the consumer’s and society’s long tem well – being. Figure 1.4 The Four P’s 1-95 Marketing Mix and the Customer Four Ps • Product • Price • Place • Promotion Four Cs • Customer solution • Customer cost • Convenience • Communication 1-96 Four As Jagdeesh Sheth : • • • • Acceptability Affordability Accessibility Awareness 4 Ps updated : Kotler • People • Processes • Programmes • Perfomance Another view !!! • We need to throw away the Four Ps and embrace the Four Es: • from Product to Experience from Place to Everyplace from Price to Exchange from Promotion to Evangelism Marketing Myopia The words were first coined by Theodore Levitt in 1960. In his definition (Levitt 1960:46), Marketing Myopia "defines an industry, or a product, or a cluster of knowhow so narrowly as to guarantee its premature senescence. • When we mention 'railroads', we should make sure we mean 'transportation'". The point he wants to make here is to define a company's mission and products in terms of more basic customer needs. That will ensure the company to survive profitably in the long run, whatever is the performance of any product/ product range. Marketing Myopia is a "Short sighted and inward looking approach to marketing that focuses on the needs of the firm instead of defining the firm and its products in terms of the customers' needs and wants... they omit to ask the vital question, "What business are we in?"" • Another cause of marketing myopia is what Levitt calls the "idea of indispensability." This concept is embodied by the petroleum industry. Levitt says that, "the petroleum industry is pretty much persuaded that there is no competitive substitute" for its products, and that all energy providers will ultimately use a derivative of crude oil, whether in the form of gasoline, diesel, or kerosene. • • Yet another cause pinpointed by Levitt in "Marketing Myopia" is what he calls "production pressures." It is very heartening for a company to know that it has the "capability to produce more products at ever-decreasing costs and sell them for ever-rising profits." However, when this occurs, "all effort focuses on production and the result is that marketing gets neglected.“ Another problem may occur with increased thrust on research and development, particularly in case of highly technical products. This overemphasizes the creation of products and overshadows customer Some other examples of Marketing Myopia • Companies that thought they were in the horse-drawn carriage business but were really in transportation were wiped out by automobiles. • Companies that thought they were in the ice supply business but were really in food and drink storage were eliminated by refrigerators. • Companies that made slide rules failed to realise they were in the technical calculation business and were made obsolete by graphics calculators. • Companies that thought they were in the CD business but were really in music were replaced by digital downloads. • Companies that thought they were in the typewriter business but were really in communications were put out of business by the word processor. Marketing Management Tasks • Develop market strategies and plans • Assessing Market Opportunities and Customer Value • Choosing Value • Designing value • Delivering value • Communicating value • Sustaining growth and value 1-108 So, What Is Marketing? Pulling It All Together Copyright ©2014 by Pearson Education, Inc. All rights reserved