Download Marketing Management

Marketing Management
A South African Perspective
M C Cant & C H van Heerden (editors)
H C Ngambi (consulting editor)
Chapter 1
The world of marketing
Learning objectives:
•Explain what marketing is
•Explain the concept of exchange
•Describe the marketing activities
•Discuss the four main marketing orientations
•Define marketing
•Explain the marketing process
•Discuss the marketing function in an organisation
What is marketing?
• Marketing has 2 facets:
•
1st: it is a philosophy, an attitude, a perspective or a
management-orientation that stresses
customer
satisfaction.
• 2nd: it is a set of activities used to implement this
philosophy.
• Therefore marketing is the process of planning
and executing the conception, pricing, marketing
communication and distribution of ideas,
products, and services to create exchanges that
satisfy individual and organisational goals.
What is marketing? contd.
• Marketing is about satisfying customer needs.
• Marketing encompasses a set of processes for
creating, communicating and delivering value
to customers in a mutually beneficial
relationship between the organisation and all
its relevant stakeholders.
• Exchanges takes place between the place of
production and the place of consumption.
The concept of exchange
• Exchange is all the activities associated with people
giving up something to receive something they would
rather have.
• Exchange does not necessarily require money.
• The 5 conditions required for exchange:
• At least 2 parties must be involved.
• Each party must have something that the other party
values.
• Each party must be able to communicate with the
other party.
• Each party must be free to accept or reject the
other’s offer.
• Each party must want to deal with the other party.
Marketing gaps
• During exchange, certain gaps are created.
• Identifying these gaps can be described as core
marketing aspects.
• The successful marketing of a suitable market offering
is only possible if all the gaps in the process have been
bridged:
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Space gap: where a geographical distance
exists between
the manufacturer and the consumer.
Time gap: distribution of seasonal products.
Information gap: inform consumers with the
correct
information regarding a product.
Ownership gap: the buyer becomes the owner of the product.
Value gap: the seller and the buyer must agree on an acceptable
exchange rate.
Intermediaries
• The activities intended to bridge the gap between the
buyer and the seller usually involve intermediaries. The 3
types are:
• Middlemen: these are enterprises directly involved in
taking title of products which are later sold to others.
• Sales intermediaries: these are agents who do not take title
of products they sell. They provide services to facilitate the
sales process and are paid for these services.
• Auxiliary enterprises: these are not directly involved in the
transfer of title but provide support services to facilitate
the selling process.
The marketing activities
• Activities used to transfer the market offering to the buyer.
• Primary marketing activity: transport
• Auxiliary marketing activities:
• Sourcing and supplying information – the seller must
know who and where potential buyers are.
• Standardisation and grading – products must be
designed to conform to specific standards.
• Storage – closes the time gap.
• Financing – costs are incurred in the transfer or
products and services from seller to buyer.
• Risk-taking – the owner of the products is exposed to
the risk of loss or damage. The risk is carried by both the
seller and buyer.
Marketing orientations
• 4 marketing orientations:
1. PRODUCT-ORIENTATION / PRODUCTION ORIENTATION
Management assesses its resources and asks questions.
Focussed on production of products only.
2. SALES-ORIENTATION
Companies focus on sales alone.
3. MARKETING ORIENTATION
It is based on an understanding that a sale depends not on an aggressive sales force, but on a
customer’s decision to purchase a product. (Satisfying a need)
• Consumer-orientation: all marketing actions should be aimed at satisfying consumer needs,
demands and preferences.
• Profit-orientation: all marketing actions should be aimed at maximising profit.
• Organisational integration: “the sum of all the parts is larger than the whole” – the system is
integrated as a whole.
4. SOCIETAL MARKETING-ORIENTATION
Social responsibility of marketing. It is the obligation of the marketing organisation to do no
harm to the social environment, and to use resources to enhance the environment.
Relationship marketing
•
Relationship marketing places its main focus on the maintenance of long term
relationships between the organisation, the government, the public, the suppliers
of raw materials, the organisation's employees, and current and potential
customers.
•
It acknowledges that different marketing strategies must be used for consumer
acquisition and retention.
•
Extended market:
• Current customers
• Potential customers
• Suppliers
• Potential employees
• Reference groups
• The influencers
• Current employee
Defining marketing
Marketing is a combination of management tasks and decisions aimed at meeting opportunities and threats in a
dynamic environment in such a way that its market offerings lead to the satisfaction of consumers’ needs and wants so
that the objectives of the enterprise, the consumer and society are achieved.
MANAGEMENT TASK
PLANNING, IMPLEMENTING AND CONTROL
Decisions
Regarding product, place, promotion and price
Opportunities
Favourable circumstances in the marketing environment which
must be utilised by marketing management
Threats
Unfavourable conditions which marketing management must
endeavour to change into opportunities
Dynamic environment
Continually changing environmental variables which
necessitate appropriate reaction from marketing management
Need-satisfying
Properties of a product based n what the consumer wants
Market- offering
Product, price, distribution, marketing communication, service
by people and processes
Attainment of objectives: The enterprise, the consumer society
Maximisation of profitability in the long term need-satisfaction
within the resources and abilities of the enterprise
The marketing process
The marketing function in an organisation
• This is a key function in an organisation owing to its contribution to profit
and its proximity to the consumer.
• Functional organisational structure:
The marketing function in
an organisation
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Operations function focuses on the processes needed to produce the need-satisfying products that
are sold to customers.
All companies need people and the tasks performed by the human resource function relate to the
acquisition, training, utilisation and retailing of a sufficient number of competent personnel.
The financial function is aimed at the acquisition, utilisation and control of the funds necessary for
running the business.
The purchasing function ensures that the materials necessary for production are bought at the right
places, times, quantities and at the right price.
The public relations function maintains and cultivates a favourable and objective image of the
organisation among those whose opinions are important to the achievement of the business
objectives.
The administration function makes available internal information for planning and control.
The marketing function is the only function that has the main aim of generating an income through
its actions.
General management includes the activities of persons in managerial positions.
The management tasks in marketing
•
Marketing management: the process of setting marketing goals for an organisation (considering
internal resources and market opportunities), the planning and execution of activities to meet
these goals and measuring progress toward their achievement.
•
The management task consists of a continuous process of planning, implementing and controlling
marketing activities. Marketing management:
Identifies opportunities and threats
Identifies those opportunities which can be utilised in terms of internal strengths and weaknesses
Compiles marketing data
Chooses a specific target market
Decides on the products to be produced in order to satisfy consumer needs
Decides on the selling price of products in order to attain the objective of profitability
Decides on specific distribution channels
Decides on marking communication methods
Decides on selection, training, remuneration and motivation of marketing personnel
Organises and leads the activities of the marketing department
Controls the marketing process
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Planning, implementation, control/evaluation
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The management tasks of marketing management:
PLANNING
IMPLEMENTATION
CONTROL/EVALUATION
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Functional marketing organisation:
Strategic marketing management
•
•
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It entails the decisions of the marketing department with a view to long-term
growth and survival in a competitive environment.
Strategic marketing takes place through the establishment of independent
divisions called ‘strategic business units’.
A SBU directs its product offering at a specific market and manages the
production, distribution and marketing communications function with a degree of
independence.
Difference between strategic marketing and
marketing management
Points of difference
Strategic marketing
Marketing management
Need for information
Information regarding the future is
needed from a great variety of sources
Decisions are taken based on
information from marketing research
projects
Details
Plans are spelt out broadly in general
terms
Plans are spelt out in detail
Relationship with financial function
A close relationship is maintained
throughout
Relationship is less clear
Decision process
Primarily bottom-up
Mainly top-down
Opportunity sensitive
Ongoing, to seek new opportunities
Ad hoc search for new opportunity
Organisational behaviour
Constantly strives to achieve synergy
between different departments
Pursues interests of the marketing
department
Nature of the job
Requires high degree of creativity and
originality
Requires reactive perspective
Leadership style
Requires proactive perspective
Requires reactive perspective
Mission
Deals with activities of the SBU’S
Deals with running the marketing of a
specific SBU
Questions
•
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The successful marketing of a suitable market offering is only possible if all the
gaps in the process have been bridged. Name and discuss these gaps by using
practical examples.
(10)
The marketing activities consists out of primary and auxiliary marketing activities.
Please name and discuss the auxiliary marketing activities by means of practical
examples.
(10)