UNDERSTANDING

MARKETING
MANAGEMENT AND THE
MARKETING

NATURE AND SCOPE OF

MARKETING MANAGEMENT

WHAT IS MARKETING?
Marketing is Meeting needs profitably.
Marketing is an organizational function and a set of processes for creating,
communicating, and delivering value to customers and for managing customer
relationships in way that benefit the organization and its stake holders. AMA
(American Marketing Association)
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.
There is an exchange and transaction where exchange is the process of
obtaining a desired product from someone by offering something in return;
transaction is a trade of values between two parties.

WHAT IS MARKETED?
Goods

Places

Services

Properties

Events

Organisations

Experience

Information

Persons

Ideas

SELLING IS ONLY THE TIP OF THE ICEBERG

There will always be a 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

Who markets?
Marketers and prospects
Markets a traditional place
where buyer and sellers gather to
buy and sell goods.

Key customer markets

Consumer markets
Business markets
Global markets
Nonprofit and governmental
markets

Marketplaces, marketspaces

and metamarkets

CORE CONCEPTS
Needs, wants, and demands

Marketing channels

Target markets, positioning,

segmentation

Supply chain

Offerings and brands

Value and satisfaction

Competition
Marketing environment
Marketing planning

NEEDS. WANTS.
DEMANDS.
Needs - states of felt deprivation including physical needs for food,
social needs for belonging and individual needs for selfexpression.

i.e. I am thirsty.
Wants - form that a human need takes as
shaped by culture and individual personality.

i.e. I want a Coca-Cola.

Demands - human wants backed by buying power. i.e. I have
money to buy a Coca-Cola.

COMPANY ORIENTATION
TOWARDS THE MARKET
PLACE
The production concept
The product concept
The selling concept
The marketing concept
The holistic marketing concept

VALUE CHAIN AND VALUE

DELIVERY PROCESS

INTRODUCTION
Value chain as a tool for identifying ways to create more customer value.

There are two ways to view the value delivery process:

(a) traditional view the firm makes something and then sells it

(b) value creation and delivery sequence the value delivery process begins
before there is a product and continues while it is being developed and after
it becomes available.

NIKE
Critics complain - Cost of raw material and manufacturing cost is relatively
cheap.

Then WHY cost to consumer is so much???

Reason

Materials, labour, shipping, equipment, import duties and suppliers

>$ 25

cost

Sales team, distributors, administration, endorsers, advertising and

R&D

$ 15 +

Sells to retailer with a profit of

$ 7

Therefore retailer pays roughly $47 to put a pair on shelf

Retailers overheads (personnel, lease, and equipment)
Retailers Profit (Approx)

Hence the shoe cost to consumer is over $80

$ 30
$ 10

THE VALUE CHAIN BY

MICHAEL PORTER
Value chain is a tool for identifying ways to create more customer value.
Every firm is a synthesis of activities performed to design, produce, market, deliver and
support its product.
It has identified 9 strategically relevant activities 5 primary and 4 support activities
5 primary activities

Bringing material into business ( inbound logistics)

Converting them into final products (operations)
Shipping out final product (outbound logistics)
Marketing them (marketing and sales)
Servicing them (Services)

4 support activities

Procurement
Technology development
Human resource management
Firm infrastructure

The core business process:

The market sensing process
The new offering realization process
The customer acquisition process
The customer relationship management process
The fulfilment management process

To be successful, a firm also needs to look for competitive advantages

beyond its own operations, into the value chains of suppliers, distributors and
customers.

HOLISTIC MARKETING
Holistic marketing sees itself as integrating the value exploration, value
creation, and value delivery activities with the purpose of building longterm, mutually satisfying relationships and co prosperity among key
stakeholders.
The holistic marketing framework is designed to address three key
management questions:
1. Value exploration - How can a company identify new value
opportunities?
2. Value creation- flow can a company efficiently create more promising
new value offerings?
3. Value delivery- How can a company use its capabilities and
infrastructure to deliver the new value offerings more efficiently?

CORPORATE STRATEGIC
PLANNING
There are 4 corporate planning activities:
1. Defining the corporate mission
2. Establishing strategic business units
3. Assigning resources to each SBU
4. Assessing growth opportunities

1. DEFINING CORPORATE
MISSION
Corporate Mission:
This seeks to embody the entire goals of the organization and the
objective of its existence.
It seeks to provide a sense of purpose, direction and opportunity
According to Peter Drucker, it is time to ask some fundamental
questions. What is our business? Who is the customer? What is of
value to the customer? What will our business be? What should our
business be? Successful companies continuously raise these
questions and answer them thoughtfully and thoroughly.

GOOD MISSION STATEMENTS

Mission statements are at their best when they reflect a vision, an
almost "impossible dream" that provides a direction for the company
for the next 10 to 20 years.
Good mission statements have 3 major characteristics:
a)
Focus on a limited number of goals. The statement, "We want to
produce the highest-quality products, offer the most service, achieve
the widest distribution, and sell at the lowest prices" claims too much.
b)

Stress the company's major policies and values.

c)
Define the major competitive spheres within which the company
will operate: 1. Industry; 2. Products and applications; 3. Competence;
4. Market segment; 5. vertical; 6. Geographical.

2. DEFINING THE BUSINESS

A business must be viewed as a customer-satisfying process, not a
goods-producing process.
Products are transient; basic needs and customer groups endure
forever. Transportation is a need: the horse and carriage, the
automobile, the railroad, the airline, and the truck are products that
meet that need.
3 Dimensions of Business: customer groups, customer needs and
technology.

PRODUCT ORIENTATION VS. MARKET

ORIENTATION
Company

Product

Market

Missouri-Pacific Railroad

We run a railroad

We are a people-andgoods mover

Xerox

We make copying
equipment

We improve office
productivity

Standard Oil

We sell gasoline

We supply energy

Columbia Pictures

We make movies

We entertain people

STRATEGIC BUSINESS
UNITS
The purpose of identifying the company's strategic business units is to
develop separate strategies and assign appropriate funding.
Three characteristics of SBU:

1. It is a single business or collection of related businesses that can be

planned separately from the rest of the company.
2. It has its own set of competitors.

3. It has a manager who is responsible for strategic planning and profit

performance and who controls most of the factors affecting profit.

3. ASSESSING GROWTH
OPPORTUNITIES
It involves
1. Planning new businesses
2. Downsizing or
3. Terminating older
businesses
If there is a gap between
future desired sales and
projected sales, corporate
management will have to
develop or acquire new
businesses to fill it.

HOW CAN ONE FILL THE

STRATEGIC PLANNING GAP?
1. Is to identify opportunities to achieve further growth within current
businesses Intensive opportunities.
2. Is to identify opportunities to build or acquire businesses that are
related to current businesses - Integrative opportunities
3. Is to identify opportunities to add attractive businesses that are
unrelated to current businesses Diversification opportunities.

A)INTENSIVE GROWTH
Corporate managements first course of action should be a review of
opportunities for improving existing businesses.
Ansoff proposed a useful framework called product-market expansion grid

ANSOFF MODEL OF
PRODUCT-MARKET
EXPANSION GRID
Market-penetration strategy The company first considers
whether it could gain more market share with its current
products in their current markets .
Market-development strategy The company considers
whether it can find or develop new markets for its current
products.
Product-development strategy The company considers
whether it can develop new products of potential interest to
its current markets
Diversification strategy The company will also review
opportunities to develop new products for new markets.
If not successful/satisfied with growth requirements, then a company must examine integrative
growth opportunities.

B) INTEGRATIVE GROWTH
Sales and profits of a business can be increased through backward, forward
or horizontal integration within its industry.
Backward integration acquire one or more of its suppliers
Forward integration enter into distribution, wholesale or retail
Horizontal integration can acquire one or more of its competitors.

If still not satisfied with sales and profits, then a company must consider diversification.

C) DIVERSIFICATION
GROWTH
When a company finds a highly attractive new industry where it can leverage
its strengths.
Three types of diversifications are possible:
1.
2.
3.

Concentric diversification Co. could seek new products that have technological or
marketing synergies with existing product line appealing to a new group of customers.
Horizontal diversification Co. can develop new products that are technologically
unrelated to its current product line and could appeal to its current customers.
Conglomerate diversification co. may seek new opportunities which have no relation
with its current technology, products or markets.

D) DOWNSIZING OLDER
BUSINESSES
Weak businesses require disproportionate managerial time and
energy, and lock-in the organizations old assets, which can have
productive use elsewhere.

SWOT ANALYSIS

Strengths
Weaknesses
Opportunities
Threats

External environment (opportunity and threat) analysis

Internal environment (strengths and weaknesses) analysis

MARKETING PLAN
A marketing plan is a written document that summarizes what the
marketer has learned about the marketplace and indicates how the
firm plans to reach its marketing objectives.
To carry out their responsibilities, marketing managers follow a
marketing process.
Working within the plans set by the levels above them, product
managers come up with a marketing plan for individual products, lines,
brands, channels, or customer groups.

Marketing plans are becoming more customer and competitor oriented

and better reasoned and more realistic than in the past.
The plan is variously called a business plan, a marketing plan and
sometimes a battle plan.

CONTENTS OF THE
MARKETING PLAN
1. Executive summary and table of contents brief summary of the main goals
and recommendations.
2. Situation analysis - Carry out SWOT analysis. Presents relevant background
data on sales, costs, market, competitors, and the various other forces.

3. Marketing strategy game plan. Product manager defines the mission and
marketing and financial objectives. Inputs taken from purchasing,
manufacturing, sales, finance and HR. Marketing strategy be specific of
branding and customer strategy
4. Financial projections includes sales forecast, an expensive forecast, and a
break-even analysis.
5. Implementation controls various internal and external measures must be
taken to assess progress and suggest possible modifications.

MARKETING
INFORMATION SYSTEM
MIS consists of people, equipment, and procedures to gather, sort, analyse,
evaluate and distribute needed, timely and accurate information to marketing
decision makers.
Is developed from internal company records, marketing intelligence activities,
and marketing research.