Marketing Management

Marketing: Marketing is not promotional hype and promises only but it is more than that. It
means consistently delivering real value to customers. It deals with customers more than any other
business function. The simplest definition of Marketing is that “Marketing is the delivery of
customer satisfaction at a profit. Understanding, creating, communicating and delivering customer
value and satisfaction are at the very heart of modern marketing thinking and practice. The twofold
goal of marketing is to attract new customers by promising superior value and to keep current
customers by delivering satisfaction. It is the homework that managers undertake to assess needs,
measure their extent and intensity, and determine whether a profitable opportunity exists.

Marketing can be defined in social and managerial point of view.

From social point of view, according to Philip Kotler, “Marketing is a social process by which
individuals and groups obtain what they need and want through creating, offering and finally
exchanging products and services of value with others.

From managerial point of view, “Marketing is the art of selling products”.

According to the American Marketing Association, “Marketing is 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 goals”.

According to Evans and Berman, “Marketing is the anticipation, management and satisfaction of
demand through the exchange process”.

So, Marketing Management can be defined as, “The analysis, planning, implementation and
control of programs designed to create, build and maintain beneficial exchanges with target buyers
for the purpose of achieving organizational objectives”.

Q: What do you mean by Selling and Marketing?

The old sense of making a sale is telling and selling but in new sense it is satisfying customer
needs. Selling occurs only after a product is produced. By contrast, marketing starts long before a
company has a product. Marketing is the homework that managers undertake to assess needs,
measure their extent and intensity, and determine whether a profitable opportunity exists.
Marketing continues throughout the product’s life, trying to find new customers and keep current
customers by improving product appeal and performance, learning from product sales results, and
managing repeat performance. Thus selling and advertising are only part of a larger marketing
mix-a set of marketing tools that work together to affect the marketplace.

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 Core Concepts of Marketing

Needs, wants Products, Value, cost & Exchange &

and demands Services satisfaction transaction

Marketers & Markets Relationship

Prospects & Networks

Fig: Core marketing concepts

Needs: The most basic concept of marketing is the human needs. Human needs are states of felt
deprivation. Human needs are physical needs for food, clothing, warmth and safety, social needs
for belongingness and affection and individual needs for knowledge and self-expression.

Wants: It is the form of human needs shaped by culture and individual personality. Wants are
shaped by one’s society and are described in terms of objects that will satisfy needs. An American
needs food but wants hamburger, French fries and soft drink but a British wants fish, chicken,
chips and soft drinks. So, it differs.

Demands: Wants become demand when backed by purchasing power. Consumers view products
as bundles of benefits and choose product that add up to the most satisfaction. Demand comprises
of three steps first, desire to acquire something, second, willingness to pay for it, and third, ability
to pay for it.

Products & Offering: A product is anything that is offered to a market for attention, acquisition,
use, or consumption that might satisfy a want or need. Anything capable of satisfying a need can
be called a product. It includes physical objects, services, persons, places, organizations and ideas.
The intangible value proposition is made physical by an offering, which can be combination of
products, services, information and experiences.

Service: Any activity or benefit that one party can offer to another that is essentially intangible and
does not result in the ownership of anything. It includes banking, airline, hotel, tax preparation and
home services.

Value & Satisfaction: Customer value is the difference between the benefits and values the
customer gains from owning and using a product and the costs of obtaining the product. The
benefits include functional and emotional benefits and costs include monetary costs, time costs,
energy costs and psychic costs. The offering will be successful if it delivers value and satisfaction
to the target buyer. The buyer chooses between different offerings on the basis of which is
perceived to deliver the most value. Value can be seen as primarily a combination of quality,
service and price, called the customer value triad. Value increases with quality and service and
decreases with price. More specifically, value can be defined as a ratio between what the customer

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gets and what he gives. So, Value = benefits / costs. The marketer can increase the value of the
customer offering in several ways by:
1. Raising benefits
2. Reducing costs
3. Raising benefits and reducing costs
4. Raising benefits more than the raise of costs
5. Lower benefits by less than the reduction of costs.

Customer satisfaction is the extent to which a products perceived performance matches a buyer’s
expectation. If the products performance falls short of expectations, the buyer is dissatisfied. If
performance matches or exceeds expectations, the buyer is satisfied or delighted.

Cost: Monetary consideration the customers pay for getting the product or service.

Exchange: Marketing occurs when people decide to satisfy needs and wants through exchange. It
is the act of obtaining a desired object from someone by offering something in return. For
exchange potential to exist, five conditions must be satisfied:

 There are at least two parties

 Each party has something that might be of value to the other party
 Each party is capable of communication and delivery
 Each party is free to accept or reject the exchange offer
 Each party believes it is appropriate or desirable to deal with the other party.

Transaction: If exchange is the core concept of marketing, transaction is the marketing’s unit of
measurement. Two parties are engaged in exchange if they are negotiating- trying to arrive at
mutually agreeable terms. When an agreement is reached, we say the transaction takes place. A
transaction is a trade of values between two or more parties. A transaction involves several
dimensions:
 at least two things of value
 agreed-upon conditions
 a time of agreement and
 a place of agreement.

Relationship: Relationship marketing is the process of creating, maintaining and enhancing

strong, value-laden relationships with customers and other stakeholders. Marketers need to build
long-term relationships with value customers, distributors, dealers and suppliers. They want to
build strong economic and social connections by promising and consistently delivering high-
quality products, good service and fair prices to the other parties over time. Relationship marketing
builds strong economic, technical and social ties among the parties. It cuts down on transaction
time and costs.

Marketing Channels: To reach a target market, the marketer uses three kinds of marketing
channels:

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Communication channels: deliver and receive messages form target buyers and include
newspapers, magazines, radio, television, mail, telephone and the internet.
Distribution channels: The marketer uses this channel to display, sell or deliver the physical
products or services to the buyer or user. They include distributors, wholesalers, retailers and
agents.

Service channels: The marketer also uses service channels to carry out transaction with potential
buyers. Service channels include warehouses, transportation companies, banks and insurance
companies that facilitate transaction.

Competition: It includes all the actual and potential rival offering and substitutes that a buyer
might consider.

Market: The concept of exchange and relationships lead to the concept of a market. A market is
the set of actual and potential buyers and sellers of a product or product class. The size of a market
depends of the number of people who exhibit the need, have resources to engage in exchange and
are willing to offer these resources in exchange for what they want.

Communication, message
Industry Market
Products, services
(a collection of (a collection of
sellers) buyers)
Money

Information

Fig: A simple marketing system

Market place: The market place is physical, as when one goes shopping in a store.
Market space: It is digital as when one goes shopping on the internet.
Metamarket: It is a cluster of complementary products and services that are closely related in the
minds of consumers but are spread across a diverse set of industries. Consider the example of
automobile sector.

Marketers: A marketer is someone seeking one or more response (attention, a purchase, a vote, a
donation) from another party, called the prospect who might engage in an exchange of values.
Marketers are those who offer products or services in the market. They are keenly interested in
markets. Their goal is to understand the needs and wants of specific markets and to select the
markets that they can serve best. In turn, they can develop products and services that will create
value and satisfaction for customers in these markets, resulting in sales and profits for the
company.

Prospects: Those who will purchase the product in future and meet the condition to be a purchaser
of company’s product. These conditions are buying power, ability, willingness etc.

The marketing program consists of numerous decisions on the mix of marketing tools to use.

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The marketing mix is the set of marketing tools the firm uses to pursue its marketing objectives in
the target market. Mc.Carthy classified these tools into four broad groups that he called the four
P’s of marketing: product, price, place and promotion.

The particular marketing variables under each P are shown in the following figure:

Marketing Mix

Target
Market

Product Price Promotion Place

Product quality List price Sales promotion Channels

Quality Discounts Advertising Coverage
Design Allowances Sales force Locations
Features Payment periods Public relations Inventory
Brand name Credit terms Direct marketing Transport
Packaging, Sizes
Services, Warranties, Returns etc

The firm can change its price, sales force size and advertising expenditures in the short run. It can
develop new products and modify its distribution channels only in the long run.
Four P’s represent the sellers view of the marketing tools available for influencing buyers. From a
buyer’s point of view, each marketing tool is designed to deliver a customer benefit. Robert
Lauterbom suggested that the seller’s four P’s corresponded to the customer’s four C’s.

Four P’s Four C’s

Product Customer solution

Price Customer cost
Place Convenience
Promotion Communication

Target market and segmentation: Market segments can be identified by examining

demographic, psychographic and behavioral differences. The marketer then decides which
segments present the greatest opportunity which is its target market. For each chosen target
market, the firm develops a market offering. The offering is positioned in the minds of the target
buyers as delivering some central benefits. Like, Volvo, therefore positions its car as the safest a
customer can buy.

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 Marketing Management

Marketing Management: Marketing management is the analysis, planning, implementation and

control of programs designed to create, build, and maintain beneficial exchanges with target buyers
for the purpose of achieving organizational objectives. So it involves managing demand, which in
turn involves managing customer relationships.

Marketing management practice: All kinds of organizations use marketing and they practice it
in widely varying ways. Some firms practice in a formalize way and other practice in a less formal
and orderly fashion. In fact, marketing practice often passes through three stages:

1. Entrepreneurial marketing
2. Formulated marketing, and
3. Intrepreneurial marketing

1. Entrepreneurial marketing: Most companies are started by individuals who live by their wits.
They visualize an opportunity and knock on every door to gain attention. It involves direct selling
and grassroots public relationships.

2. Formulated marketing: As small companies achieve success, they inevitably move toward
more formulated marketing. It involves small range of advertisements and market research.

3. Intrepreneurial marketing: Large and mature companies use the formulated marketing
practices by scanning market research reports, and trying to fine-tune dealer relations and
advertising messages. Sometimes they lose the marketing creativity and passion that they had at
start. So they need to encourage more initiative and intrepreneurship at the local level.

Marketing management philosophies

Marketing management is the carrying out the task to achieve desired exchanges with target
markets. Marketing activities should be carried out under a well thought out philosophy of
efficiency, effectiveness and social responsibility. The philosophies are the guidance for marketing
efforts. It emphasizes on the weight that should be given to the interests of the organizations,
customers and society. There are some concepts under which organizations conduct their
marketing activities. These are:

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1. Production Concept
2. Product Concept
3. Selling Concept
4. Marketing Concept

5. Societal Marketing Concept

6. Customer Concept
7. Holistic Concept

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1. Production Concept: It holds that consumers will favor products that are available
and highly affordable. Therefore, management should focus on improving production
and distribution efficiency that means high production efficiency, low costs and mass
distribution. This concept is still useful in two types of situations, when the demand
exceeds the supply and when the product’s cost is too high and improved productivity
is needed to bring it down. It is used when a company wants to expand the market.

2. Product Concept: It holds the idea that consumers will favor products that offer the
most quality, performance, and features and that the organization should therefore
devote its energy to making continuous product improvements. The managers of the
company assume that buyers admire well-made products and can evaluate quality and
performance.

3. Selling Concept: It holds the idea that consumers will not buy enough of the
organization’s products unless the organization undertakes a large-scale selling and
promotion effort. This concept is typically practiced with unsought goods, those that
buyers do not normally think of buying, such as encyclopedias or insurance. Most
firms practice the selling concept when they have over capacity. This concept takes
an inside-out perspective. It starts with the factory, focuses on the company’s existing
products and calls for heavy selling and promotion to obtain profitable sales. It
focuses on customer conquest, getting short-term sales with little concern about who
buys or why. Their aim is to sell what they make rather than what the market wants.
However, marketing based on hard selling carries high risks.

Starting Focus Means Ends

Point
Factory Existing Selling & Profits through
Products Promoting Sales volume

Fig: The Selling Concept

4. Marketing Concept: It holds the idea that achieving organizational goals depend on
determining the needs and wants of target markets and delivering the desired
satisfactions more effectively and efficiently than competitors do. The main task for
marketers not to find the right customers for the product, but the right products for the
customers. It can be expressed in many ways:

 Meeting needs profitably

 Find wants and fill them
 Love the customer not the product
 Putting people first.

The marketing concept based on four pillars: target market, customer needs, integrated
marketing and profitability.

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 Starting Focus Means Ends
Point
Market Customer Integrated Profit through
needs marketing customer satisfaction

Fig: The Marketing Concept

Target Market: No company can operate in every market and satisfy every need. Nor
can it always do a good job within one broad market.

Customer needs: A company can define its target market but fail to fully understand the
customer’s needs. Customers can have five types of needs: Stated needs, Real needs,
Unstated needs, Delight needs and Secret needs.

Integrated Marketing: When all the company’s departments work together to serve the
customer’s interests, the result is integrated marketing. Integrated marketing takes place
in two levels. First, the various marketing functions- sales force, advertising, product
management, marketing research, and so on- must work together. All these marketing
functions must be coordinated from the customer’s point of view. Second, marketing
must be will coordinated with other company departments. Marketing does not work
when it is merely a department, it works only when all employees appreciate their impact
on customer satisfaction. To foster teamwork among all departments, the company
carries out internal marketing as well as external marketing.

External marketing is marketing directed at people outside the company and Internal
marketing is the task of successfully hiring, training, and motivating able employees
who want to serve the customers well. It makes no sense to promise excellent service
before the company’s staffs in ready to provide excellent service.

Profitability: The ultimate purpose of the marketing concept is to help organizations to

achieve their goals. In case of private firms, the major goal is profit, in the case of non-
profit and public organizations, it is surviving and attracting enough funds to perform
their work for profit organizations, the key is not to aim for profits as such but to achieve
them as a by-product of doing the job well.

5. Societal Marketing Concept: It holds the idea that the organization should
determine the needs, wants and interests of target markets and deliver the desired
satisfactions more effectively and efficiently than do competitors in a way that
maintains or improves the consumer’s and society’s well being. This concept calls on
marketers to balance three considerations in setting their marketing policies: company
profits, consumer wants and society’s interests. It emphasizes on both the short run
wants and long run welfare of consumers.

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 Society (Human welfare)

Societal
Marketing
Concept

Consumers Company
(Want satisfaction) (Profits)

6. Customer Concept: It emphasizes on creating, maintaining and developing a long

term value laden or value based relationship with the target customers benefits and
costs. The concept is based on the idea that the customer has the main importance for
a company and a company is not doing a favor by serving him rather a customer is
doing a favor by giving the company an opportunity to do so. The companies collect
information on each customer’s past transactions, demographics, psychographics, and
media & distribution preferences. They hope to achieve profitable growth through
capturing a larger share of each customer’s expenditures by building high customer
loyalty and focusing on customer life time value.

Starting Focus Means Ends

Point
Individual Customer One to one Profitable growth
Customer needs & marketing through capturing
values Integration & customer share, loyalty
Value-chain & lifetime value

Fig: The Customer Concept

7. Holistic Concept: It is the integration of internal marketing, integrated marketing,

relationship marketing and socially responsible marketing concept.

(a) Internal Marketing Concept: This concept holds the idea to satisfy the internal
people or employees within the organization, so that they work for the satisfaction
of the customers. The first step to satisfy the customers is to satisfy the internal
people first or to motivate them first.

(b) Integrating Marketing Concept: It refers an approach where all the departments
of the organization work in a coordinated manner to support and serve the
customers. Any single section cannot serve the customers without the help of
other sections. The customer’s satisfaction is achieved when all the departments
have the common goals and intention to serve the customers.

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(c) Relationship Marketing Concept: It refers the long-term relationship with the
customers. It emphasizes on creating, maintaining and developing a long term
value laden or value based relationship with the target customers benefits and
costs.

(d) Socially responsible marketing: It is just as the societal marketing concept. It

should be responsive to the society’s welfare. That means, it holds the idea that
the organization should determine the needs, wants and interests of target markets
and deliver the desired satisfactions more effectively and efficiently than do
competitors in a way that maintains or improves the consumer’s and society’s
well being.

Selling Versus Marketing Philosophies

Topic Selling Concept Marketing Concept

Objectives Sales volume rather than profits. Profit planning. They plan
They are not usually attentive to customer, product, service and
profit differences among marketing strategies to attain
products, services or customer profitable sales volume and market
classes unless these differences share at acceptable levels of risk.
are reflected in compensation.
Timing The short run. They concentrate Long run trends, opportunities and
on current customers, products, threats. They study how these will
services and strategies. translate into new markets,
products, services and strategies that
will assure long-term growth.
Customer Individual customer rather than Customer types and differences
type groups of customers. They are among groups of customers. The
acknowledgeable about attempt to appeal to profitable
individual accounts and factors customer groups through superior
bearing on specific sales value and distinctive offerings.
transactions.
Area of Field work rather than Coordinated market analysis,
work deskwork. They prefer to sell to planning, and control. They
customers instead of developing compute the financial implications
plans, strategies and tactics. of marketing plans.
Starting Factory Market
Point
Focus Existing products Customer needs
Means Selling and promoting Integrated marketing
Ends Profit through sales volume Profit through customer satisfaction

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 Demand Management in Marketing

1. Negative Demand: A market is in a state of negative demand if a major part of the

market dislikes the product and may even pay a price to avoid it. The marketing task
is to analyze why the market dislikes the product and whether a marketing program
consisting of product redesign, lower prices and more positive promotion can change
the market beliefs and attitudes.

2. No Demand: Target customers may be unaware of or uninterested in the product. The

marketing task is to find ways to connect the benefits of the product with the person’s
natural needs and interests.

3. Latent Demand: Many consumers may share a strong need that cannot be satisfied by
any existing product. The marketing task is to measure the size of the potential
market and develop effective goods and services that would satisfy the demand.

4. Decline Demand: Every organization, sooner or later, faces declining demand for one
or more of its products. The marketing task is to reverse the declining demand
through creative remarketing of the product.

5. Irregular Demand: Many organizations face demand that varies on a seasonal, daily
or even hourly basis, causing problems of idle or overworked capacity. The marketing
task, called synchro-marketing, is to find ways to alter the same pattern of demand
through flexible pricing, promotion and other incentives.

6. Full Demand: Organizations face full demand when they are pleased with their
volume of business. The marketing task is to maintain the current level of demand in
the face of changing customer preferences and increasing competition. The
organization must maintain or improve its quality and continually measure consumer
satisfaction to make sure it is doing a good job.

7. Overfull Demand: Some organizations face a demand level that is higher than they
can or want to handle. The marketing task, called demarketing, requires finding ways
to reduce the demand temporarily or permanently. General demarketing seeks to
discourage overall demand and consists of such steps as raising prices and reducing
promotion and service. Selective demarketing consists of trying to reduce the demand
coming form those parts of the market that are less profitable or less in need of the
product. Demarketing aims not to destroy demand but only to reduce its level
temporarily or permanently.

8. Unwholesome Demand: Unwholesome products will attract organized efforts to

discourage their consumption. The marketing task is to get people who like
something to give it up, using such tools as fear messages, price hikes, and reduced
availability.

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 The Marketing Process

The task of any business is to deliver value to the market at a profit. There are at least two
views of the value-delivery process.

The traditional view is that the firm makes something and then sells it. Thomas Edison
invents the phonograph and then hires people to make and sell it. In this view, marketing
takes place in the second half of the value delivery process. The traditional view assumes
that the company knows what to make and that the market will buy enough units to
produce profits for the company.

Make the Product Sell the Product

Design Procure Make Price Sell Advertise/ Distribute Service
Product Promotion

Fig: The Traditional view of Value-Delivery Process

Choose the Value

Customer Market Value
Segmentation selection/Focus Positioning

Provide the Value

Product Service Pricing Sourcing/ Distributing/
Development Development Making Servicing

Communicate the Value

Sales Force Sales Promotion Advertising

Fig: Value Creation and Delivery Sequence

But the traditional view of business process will not work in more competitive economies
where people face abundant choices. The “mass market” is actually splintering into many
micro-markets, each with its own wants, perceptions, preferences and buying criteria.
The smart competitor therefore must design the offer for well-defined target markets.
This belief is at the core of the new view of business processes, which places marketing
at the beginning of the business planning process. Instead of emphasizing making and
selling, companies that take this view of the business process see themselves as part of a
value creation and delivery sequence. This sequence consists of three parts.

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The first phase, choosing the value, represents the “homework” that marketing must do
before any product exists. The marketing staff must segment the market, select the
appropriate market target, and develop the offer’s value positioning. The segmentation,
targeting, positioning (STP) is the essence of strategic marketing.
Once the business unit has chosen the value, it is ready to provide the value, the tangible
product’s specifications and services must be detailed, a target price must be established,
and the product must be made and distributed. Developing specific product features,
prices and distribution occur at this stage and are part of tactical marketing, the second
phase of the value creation and delivery sequence.

The task in the third phase is communicating the value. Here further tactical marketing
occurs in utilizing the sales force, sales promotion, advertising, and other promotional
tasks to inform the market about the product. As figure shows the marketing process
begins before there is a product and continues while it is being developed and after it
becomes available. The Japanese have further developed this view by promulgating the
following concepts:

 Zero customer feedback time: Customer feedback should be continuously

collected after purchase to learn how to improve the product and it’s marketing.
 Zero product-improvement time: The Company should evaluate all the customer’s
and employee’s improvement ideas and introduce the most valued and feasible
improvements as soon as possible.
 Zero Purchasing Time: The Company should receive the required parts and
supplies continuously through just-in-time arrangements with suppliers. By
lowering its inventories, the company can reduce its costs.
 Zero Set up Time: The Company should be able to manufacture any of its
products as soon as they are ordered, without facing high setup time and costs.
 Zero Defects: The products should be of high quality and free of flaws.

The Marketing Management Process:

Analyzing Developing Planning Managing

marketing marketing marketing the
opportunities Strategies Programs marketing
Efforts

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