MBA Marketing Management

MODULE 1

UNDERSTANDING MARKETING
MANAGEMENT
Lecturer:George Kofi Amoako

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 Module Purpose
1. To define marketing and explain its scope, its role and
importance in the management of the
organization/customer interface business activities.
2. To describe how today’s market oriented and
customer-focused organization differs from the
traditional production, product or sales-oriented
organization, in terms of business growth sustainability
and profitable customer relationships.
3. To explain how organizations build stronger customer
relationships, using current thinking about customer
life-time values and relationship marketing.

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 Key Learning Topics

1. Marketing as a Contemporary Business Philosophy – Contrasted

with some other Business Philosophies
2. The Holistic Marketing Concept
3. Why Adoption of the Marketing Concept is a Critical Factor for
Business Success.
4. Distinction between Market orientation and Marketing orientation
5. Marketing Management & Shifts in Practice
6. The Role of Marketing in Corporate Planning and Managing
Strategic Business Units
7. Marketing as an Organizational/Management Process

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 What is Marketing?

 The term Marketing is derived from the word “markets”, meaning

“people” - people representing the supply and demand sides of
societal economic activity, who are engaged in the exchange of
goods and services to satisfy identified needs at a profit.
 On the demand side are consumers or users of products and
services; and on the supply side are suppliers of those products and
services, who are competing to get the best out of the exchange
process.
 Marketing therefore means an organizational process responsible
for managing the exchange of goods and services between
suppliers and buyers for profit and need satisfaction.

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 A General Overview
 According to Kotler & Keller(2009)
i. Marketing profoundly affects our day-to-day lives. It is embedded
in everything we do – from the choice of a marital partner to the
clothes we wear, the Web sites we click on, to the shops we shop
in, and to the ads we hear on radio, read in newspapers or
magazines, or see on television.
ii. Effective marketing (the result of careful planning and execution
of marketing strategy) has become an increasingly vital
ingredient for business success.
iii. As organizations become more and more market-oriented, and
customer-focused, business relationships are continually refined
and reformed in virtually all industries to increase the chances of
firms’ surviving challenging competitive environments and
achieving growth and competitive excellence.

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 Some Definitions of Marketing

1. Kotler & Keller (2009): Marketing is a societal process by which

individuals and groups obtain what they need and want through
creating, offering, and freely exchanging products and services of
value with others.

2. The Chartered Institute of Marketing (CIM-UK): Marketing is

the management process responsible for identifying, anticipating
and satisfying customer requirements profitably.

3. The American Marketing Association (2004): Marketing is an

organizational function and a set of processes for creating,
communicating, and delivering value to customers, and for
managing customer relationships in ways that benefit the
organization and its stakeholders (See Kotler & Keller,2009)

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 Definitions of Marketing (2)

4. Roger W. Brooksbank (1991) defines Marketing as a

company-wide commitment to providing customer
satisfaction. It is also a managerial process involving
the regular analysis of the firm’s competitive situation,
leading to the development of marketing objectives,
and the formulation and implementation of strategies,
tactics, organizations and controls for their
achievement.

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 Key Issues involved in the Definitions

 A business philosophy – i.e. a company-wide commitment to providing

customer satisfaction (Brooksbank), profitably (CIM-UK).
 A societal exchange process – exchanging products and services of value
with others (Kotler & Keller) (for living standards enhancement)
 A management process for creating, communicating and delivering
customer values, and for managing customer relationships in ways that
benefit the organization and its stakeholders
 Stakeholders include shareholders, employees, suppliers, customers,
consumers, government, the publics, and society as a whole.
 Benefits include profit, dividend, customer satisfaction, employee well-
being, tax revenue, etc.

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 Our Working Definition

 Bringing together the key issues involved in these

definitions into a conceptual framework, we can develop
a working definition to guide the rest of our study.
 Our working definition is thus stated as follows:
 Marketing is:
a) A company-wide business philosophy and
b) A set of organizational processes for
i. Creating, communicating and delivering superior
customer values, and for
ii. Managing customer relationships in ways that benefit the
organization and its stakeholders.

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 Marketing as a Business Philosophy

 As business philosophy, marketing believes in the principle that “the

consumer is king” and thus recognizes the importance of putting the
customer at the center of corporate decisions and policies
 Successful firms go beyond the conventional lip-service to marketing in
that they develop a drive to satisfy customers better than their competitors
do.
 A study into successful, “excellent” large firms by Peters & Waterman
(1982) found that such firms are more driven by “close to the customer”
attributes, rather than by “technology” or “cost” attributes. Technology
facilitates the process of getting closer to the customer at a relatively
lower cost
 A similar study by Goldsmith & Clutterbuck (1984) found that “every
function of the firm has as its prime objective the satisfaction of customer
requirements”. This implies that firms, in crafting their strategic intents
must have in their mission statements customer satisfaction as their
main philosophy of business.

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 Attributes of Successful Market-Oriented Firms

 Studies into successful market-oriented firms report as follows:

1) Successful companies benefit from the personal commitment of their CEO to the
achievement of customer satisfaction, customer retention goals.

2) A key aspect of this commitment is the recognition of marketing as a key or critical

success factor in business

3) The CEOs’ attitude towards marketing is “marketing should guide all the
company’s operations”, rather than parochially holding a view that marketing’s role
is specifically a departmental function.

4) Strong leadership is shown by CEOs in shaping and promoting the firm’s core
values, beliefs and attitudes, by their high visibility throughout the firm on day to
day basis.

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 Marketing as an Organizational Process

 The other dimension of our working definition is marketing being a set of

organizational processes:
 For creating, communicating and delivering superior customer values, and
 For managing customer relationships

 Customer values are the unique combination of benefits expected and received by a
target market of buyers and consumers. These values include such factors as quality,
price, convenience, on-time delivery, etc.

 The values expected by buyers or consumers differ from one product or service
market to another. For example, the values expected by air travelers would include
safety, convenience, comfortability, reliability, affordable fares, baggage allowance,
frequent loyalty offers, etc. For a mobile telephony service supplier, the values would
include network coverage, easy inter-network connectivity, low cost per unit call,
service reliability, frequent loyalty offers, etc.

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 The Value-Creation Process

 The value creation process involves:

1) Researching into markets and analyzing identified or anticipated
customer/consumer needs
2) Segmenting markets on the basis of differences in needs, values, and
expectations
3) Selecting appropriate segments for targeting
4) Developing products or services that meet those needs through the firm’s
value-chain processes of finance, research and development,
procurement, human resource management, manufacturing, (production
or operations), and total quality management.
 The tools of marketing used in the value-creation process include
marketing research, marketing information system, internal marketing,
and new product or service development.

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 The Value Communication Process

 The process of communicating customer values include the use of

integrated marketing communication tools to inform, persuade and remind
target audiences within a target market to respond favourably to a firm’s
product or service offering.
 The tools of marketing communications include advertising, personal
selling, sales promotions, public relations/publicity, packaging, labeling,
branding, events, and interactive media such as telephone, the Internet,
etc.
 The role of marketing communications can be stated as follows:
1) To highlight the customer values built into the product
2) To project brand identity through effective positioning
3) To raise the brand above competing brands, through differentiation
4) To move the consumer from a psychological state of brand unawareness
to awareness, interest, brand preference and ultimate brand loyalty.

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 The Value Delivery Process

 Delivering customer values involves the management of marketing channels

of intermediaries – viz. distributors, wholesalers, retailers and other
intermediary agents.

 In managing its intermediaries, the firm must maximize communication

impact at the point-of-sale, and thus tactically decide how much effort to
devote to push versus pull marketing strategy.

 A push strategy involves the firm using its sales force and trade promotion
schemes to induce intermediaries to order, stock, promote and sell the
product to end-users.

 A pull strategy involves the firm using advertising and sales promotions to
persuade consumers to demand the product from the shops, thus inducing
retailers and wholesalers to order it.

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 Managing Customer Relationships

 A major role of marketing is to manage customer relationships in

ways that benefit the organization and its stakeholders.

 Many successful firms chart their long-term growth paths by

balancing their revenue-generation efforts through cost-effective
acquisition and retention of profitable customers.

 Such firms lay emphasis on building and sustaining profitable

customer-bases through relationships marketing, total quality
management, and customer care programmes.

 First-time successful selling is the starting point of relationship

marketing. “You don’t sell to a customer twice, rather a satisfied
customer would buy from you always”.

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 Stakeholder Benefits of Effective & Efficient
Customer Relationship Management

 Effective customer relationship management provides

some benefits that meet the expectations of various
categories of a firm’s stakeholders, as follows :
1) Shareholders - Rising Dividends
2) Employees - Rising pay, individual well-being
3) Suppliers - Sustainable business growth
4) Customers - Satisfaction
5) Government - Increasing tax revenue

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 The Scope of Marketing

 Marketing activities are undertaken in four major

sectors, all aimed at societal living standards
enhancement:
1. Consumer Products & Services Marketing
2. Business-to-Business (B2B) Organizations, or
Industrial Products & Services Marketing
3. Not-for-Profit Organization Marketing (e.g. NGOs)
4. Marketing of Events, Places and Personalities

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 What can be Marketed
 In general, Marketing people are involved in the marketing of:
1. Products – e.g. branded industrial and consumer products,
2. Commodities – e.g. raw cocoa, sugar, salt, timber, etc.
3. Services – e.g. banking, hospitality, telecommunication, etc.
4. Events – e.g. beauty pageants, sporting tournaments, exhibitions, etc.
5. Expertise – e.g. consultancy, teaching, coaching, etc.
6. Personalities – e.g. political candidates, contestants, imaging, etc.
7. Places – e.g. holiday resorts, parks, gardens, etc.
8. Properties – e.g. intellectual, estates, etc.
9. Organizations – business, non-business, institutions, etc.
10. Information – e.g. literature publications, CD-ROMs, the internet, etc.
11. Ideas – e.g. wearing of seat belts/crash helmets, avoid littering, etc.

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 Philosophical Approaches to Managing Business

 Philosophical approaches in this context are the ideological bases upon

which firms conduct their business activities.
 Successful firms incorporate in their mission statements what their
business philosophy is, and this statement guides their strategic
decisions.
 According to Andrew Campbell & Laura Nash (1992), a good mission
statement has four basic components – purpose, strategy, philosophy
(core values, beliefs), and behavioural standards.
 The emphasis here is on the philosophical approach being pursued.
Different firms pursue different philosophies, including:
1) The Production concept
2) The Product concept
3) The Sales (Selling) concept
4) The Marketing concept
5) The Holistic Marketing concept

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 The Production Concept

 It’s the oldest concept of business

 It holds that consumers will prefer products that are widely available
and inexpensive (mass production products)
 Managers of production oriented business firms achieve high
production efficiency, low costs, and mass distribution advantage, at
the expense of quality.
 Production orientation makes sense in serving developing countries.
For example, in China, PC or domestic appliances manufacturers
take advantage of the country’s inexpensive labour pool to dominate
the market of some developing countries with low cost, low-quality
products.
 Investment in production facilities is key, and the production
department is the centre of business and management decisions.

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 The Product Concept

 The product concept holds that consumers will favour high quality, high performance,
and thus premium priced products with the latest innovative features.

 Managers of such organizations focus on making superior, difficult to imitate products

and improving quality continuously.

 They define their businesses on the bases of “what the company makes”, rather than
what “benefits” consumers derive from the product –e.g. cosmetics, rather than
“Hope”, ¼” drill”, rather than “1/4” holes, “Lawn mower” rather than “Garden control”

 A better improved, high quality product will not necessarily be successful, unless the
product offers the desired benefits and is correctly targeted, appropriately priced,
distributed and promoted.

 Investment in Research & Development (R&D) technology and quality control is key;
the R&D department being the centre of business decisions.

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 The Sales (or Selling) Concept

 The sales or selling concept holds that consumers and

organizational buyers, if left alone, will ordinarily not buy
any product.
 The organization must therefore use aggressive selling
rather than persuasive marketing to coerce people to
buy whatever they are selling, irrespective of whether the
person needs the product or not.
 The sales concept reflects the thinking of a former Vice-
President of Coca Cola who once remarked – “The
purpose of marketing is to sell more stuff to more people
more often for money in order to make more profit”.

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 The Sales Concept (2)

 Aggressive selling (rather than persuasive marketing) is practiced mostly by

firms engaged in unsought goods – i.e. goods that buyers normally would
not buy. These include insurance, encyclopedias, dog chains, local
medicines, etc.

 Some firms practice the sales concept when they have excess stock.The
aim is to get rid of un-patronized stocks, or sell whatever they have made
rather than what the market really needs of wants.

 Firms engaged in the sales concept invest heavily in hard-selling facilities

such as network marketing channels, using the sales force to push the
firm’s products.

 In a changing marketing environment characterized by customer

sophistication, it is risky practicing hard selling.

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 The Marketing Concept
 According to Kotler & Keller (2009) the marketing concept had historically
emerged since the 1950s, emphasizing a dramatic shift of the business philosophy
paradigm:
a) Instead of a product-centered, “make and sell” philosophy, businesses shifted to
a market-led and customer-centered, “sense-and-respond” philosophy.

b) Instead of “hunting for customers” philosophy, marketing emphasized

“gardening and growing profitable customers” philosophy – The job is not to
find the right customers for your already-made products, but rather, making the
right products with the right values/benefits to satisfy identified needs and wants of
customers being targeted.

c) Instead of a “marketing department” structure, the marketing concept emphasizes

a “marketing organization” structure – the whole organization rather than only the
marketing department is responsible for creating, communicating and delivering
customer values that are superior to the competition.

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 Why the Marketing Concept is Critical to
Business Success
 The marketing concept is a corporate affair – a generally shared
business philosophy, which should permeate top management
thinking and influence company strategic decisions and policies.
 The concept does not give credence to the thinking that marketing is
the preserve of a marketing department; rather, it actively involves
all employees and external agencies of the organization in the
planning and implementation of all marketing plans and
programmes directed at attracting and retaining customers and
increasing profitability.
 The CEO of the organization provides the required leadership.

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 Marketing Concept – A Critical Success
Factor
 The marketing concept holds that the key to achieving
business success consists of the company being more
effective and more efficient than competitors in creating,
communicating and delivering customer values in its
chosen markets.
 Studies show that companies that practice the marketing
concept are more successful than companies that
practice any of the traditional business concepts, such
as the production, the product and the sales concepts.
(Kohli & Jaworski, 1990; Narver & Slater, 1990;
Deshpande & Farley – see Kotler & Keller (2006 p33) for
literature details

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 Marketing Concept Challenges

 The marketing concept challenges marketing firms to be

truly knowledgeable about customer/consumer needs
and be responsive to their needs. This is because:
 Today’s customers and consumers are sophisticated,
well-informed, demanding, have increased discretionary
spending, and confident about the future.
 Today’s consumers buy products and services that are
meaningful to their self-concept and lifestyle, in terms of
the specific performance benefits they deliver.

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 The Holistic Marketing Concept

 Market-oriented firms of the 21st century are increasingly

recognizing the need to have a better scientific framework that
provides a more comprehensive, cohesive and integrated approach
to marketing, in ways that go beyond traditional applications of the
marketing concept.
 The holistic marketing concept is thus a new thinking that
recognizes a holistic view of marketing as that of developing,
designing, and implementing marketing programmes, and
processes for building and sustaining internal and external
relationships, and for monitoring and evaluating performance,
recognizing the inter-dependence of every individual activity on the
marketing plan.
 Holistic marketing recognizes that in marketing, “everything about
business matters” – a broad, integrated perspective of business.

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 The Holistic Marketing Concept (2)

 Holistic marketing is an approach to marketing that attempts to

recognize and reconcile the scope and complexities of a firm’s
marketing activities.
 The Holistic marketing concept is an attempt to define the broadened
scope of marketing from the organizational perspective. It thus
provides a scientific framework to guide marketing managers in
making effective marketing decisions.
 Kotler in Fig.1.1 identifies Four components of holistic marketing
viz.
1. Integrated marketing
2. Relationship marketing
3. Internal marketing
4. Performance marketing

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 Fig1.1 Components of Holistic Marketing
Products &
Senior Services
Marketing Other Communications Channels
Management
Department Departments

Internal Integrated
Marketing Marketing

Holistic
Marketing

Performance Relationship
Marketing Marketing
Sales
Brand & Revenue
Customer
Equity Community
Ethics Customers Partners
Channel
Legal
Environment 31
 The Holistic Marketing –
Internal Marketing – A key to External Marketing
Success
 Internal marketing is the task of hiring, training, and
motivating right caliber employees who are eager to
serve customers well.
 It is an idea to treat employees as internal customers
who have expectations of their employers, and these
must be recognized and satisfied. Satisfying internal
customer needs leads to external marketing success
 It ensures that everyone in the organization embraces
the marketing concept, especially senior management.

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 Two Levels of Internal Marketing

 The Marketing Department – The sales force and all

personnel involved in marketing research, advertising,
customer service, product portfolio/brand management,
and telemarketing – all must work together towards
customer satisfaction and company profitability. Very
often there are conflicts and misunderstandings.
 Other Departments within the Organization must also
be conscious of the customer and sensitive to his/her
needs. Marketing thinking must be pervasive throughout
the organization.

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 The Holistic Marketing Concept
Integrated Marketing
 Integrated marketing is one of the four pillars Kotler recognizes as
constituting the bases for effective design and implementation of the
marketing concept. The other pillars are target marketing, customer focus
and profitability.

 The marketer’s task is to study and analyze the target market, and, focusing
on specific needs of customers within the target market, devise the
marketing mix (the 4Ps, 7Ps) and assemble fully integrated marketing
programs to create, communicate and deliver superior customer values
profitably. (Fig. 1.2)

 McCarthy defines the marketing mix as marketing tools the firm uses to
pursue its marketing objectives. Traditionally, the marketing mix is made up
of four variables – Product, Price, Place and Promotion. With service
marketing becoming a critical success factor, three other Ps – Participants,
Processes, and Physical Evidence – are added.

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 Fig. 1.2 The Traditional Four Ps - Marketing Mix

Marketing Mix

Product
Product variety Place
Target market
Quality Channels
Design Coverage
Features Assortments
Brand name Locations
Packaging Inventory
Sizes Transport
Services Promotion
Price
Warranties Sales promotion
List price
Returns Advertising
Discounts
Allowances Sales force
Payment period Public relations
Credit terms Direct marketing

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 Marketing Mix Strategy

 Fig 1.3 explains that a company :

i. creates an offering mix of products, services, and

prices, and
ii. utilizing a communications mix of advertising, sales
promotion, events and experiences, public relations,
direct marketing, and personal selling
iii. reaches target customers/consumers
iv. through distribution channels

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 Fig. 1.3 Marketing Mix Strategy

Communication mix

Advertising

Sales
Promotions
Offering mix
Events and
Products
Company Services
Experiences Distribution Target
Prices Public channels customers
Relations
Direct
Marketing
Personal
Selling

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 Relationship Marketing

 To be successful, firms have to collaborate with other business

organizations within their industries.

 Relationship marketing aims at building mutually satisfying long-

term relationships with key industry participants – customers,
suppliers, distributors, government, and the publics – in order to
earn and retain their support or business.

 Relationship marketing leads to 4 positive outcomes:

i. Customer satisfaction
ii. Customer loyalty
iii. Better service quality
iv. Continuous profitability

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 Performance/Social Responsibility Marketing

 Holistic marketing incorporates social responsibility

marketing, and understanding of the broader concerns of
ethical, environmental, legal and societal context within
which marketing activities take place.
 Social responsibility requires that marketing organizations
carefully consider the role that they are playing, and how
such role affects the welfare of society as a whole.
 We must understand the financial and non financial
returns of businesses.

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Discussion
 Page 41 and 45&46-48 of Text

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 Market Orientation vs. Marketing Orientation

 Many authors have debated the conceptual and application differences

between the terms market-oriented and marketing-oriented organizations
(Perrault, 1984; Kohli & Jaworski, 1990).
 Market orientation implies organization-wide adoption and operationalization
of the marketing concept. According to Deshpande & Webster (1989) market
orientation is the most relevant aspect of organizational culture – a
fundamental shared set of beliefs and values that puts the customer in the
center of the firm’s strategic and operational decision-making.
 Marketing orientation focuses on the specific value-chain activities of the
marketing department, which are aimed at facilitating the
organization/customer interface – e.g. marketing research, selling, and
managing the sales force, distribution, advertising and sales promotional
campaigns, etc.

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 Marketing Management

 Kotler & Keller (2009) define marketing

management as “the art and science of
choosing target markets and getting,
keeping, and growing customers through
creating, communicating and delivering
superior customer values”.

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 MARKETING MANAGEMENT TASKS

1. Analysing the Marketing Environment and Target Markets

2. Developing Marketing Strategies and Plans
3. Creating and Shaping Offerings of Value to Customers
4. Communicating Customer Values
5. Delivering Customer Values
6. Building and Strengthening Profitable Customer Relationships
7. Building and Sustaining Strong Brands
8. Creating and Sustaining Long-term Business Growth and
Competitive Excellence.

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 Shifts in the Practice of Marketing Management
Kotler & Kelly’s Perspectives

 From Marketing Department to Marketing Organization

 From Mass Marketing to Target Marketing
 From focusing on Profitable Transactional Selling to focusing on
Customer Life-time Value through Relationship Marketing.
 From Building Brands through Advertising to Building Brands
through Integrated Marketing Communications
 From Attracting Customers through Stores and Salespeople to
Making products/services available Online.
 From a focus on Gaining Market Shares to a focus on Building
Customer Base
 From focusing on Shareholders to focusing on Stakeholders

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 Factors Influencing the Change
Boyd, Walker, et al. Perspectives
1. Increased globalization of markets and Competition
2. The growth of the Service Sector of the economy and
the importance of service in maintaining Customer
Satisfaction and Loyalty.
3. The rapid development of new information and
communication technologies.
4. The growing importance of relationships for improved
coordination and increased efficiency of marketing
programs, in terms of capturing a larger proportion of
customers’ life-time value.

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 The Role of Marketing in Corporate &
Business Strategic Planning
 The primary strategic responsibility of any manager is to look
outward continuously to keep the firm or business unit abreast with
changes in its competitive environment.
 Because marketing managers occupy positions in the
organization/customer interface of customers, distributors and
competitors, they are most familiar with conditions and trends in the
firm’s market environment.
 Consequently, they not only are responsible for developing strategic
plans for their own product/market segments, but are often active
participants and contributors to the strategic planning,
implementation and control processes at both corporate and
business unit levels.

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 Strategic Planning – The Marketing
Manager’s Role
1. To provide market-related information to decision-
makers throughout the organization.
2. To develop and implement the strategic marketing plan
aspect of the business plan.
3. To develop and implement marketing plans and
programmes for the individual products in the firm’s
portfolio – including pricing strategies, distribution
strategies and communication strategies – in response
to changing customer needs and preferences.
4. To manage customer relationships in ways that benefit
the organization and its stakeholders.

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 Guidelines for the Market-Driven Manager
F.W. Webster (1994)
1. Create customer focus throughout the business
2. Listen to the customer
3. Define and nurture your distinctive competence
4. Define marketing as market intelligence
5. Target customers precisely
6. Manage for profitability, not sales volume
7. Make customer value the guiding star
8. Let the customer define quality.

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 Guidelines (2)

9. Measure and manage customer expectations

10. Build customer relationships and loyalty
11. Define the business as a service business
12. Commit to continuous improvement and innovation
13. Manage culture along with strategy and structure
14. Grow with partners and alliances
15. Destroy marketing bureaucracy.

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Discussion
 Page74,77,82-86 of Textbook

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 The Marketing Management Process

Situational Analysis Corporate or Business-unit Vision, Mission, Objectives

Market Opportunity Analysis

•Environmental and Competitor Analysis
•Industry Dynamics and Strategic Change
•Customer Analysis
•Marketing Research and Market Measurement
•Market Segmentation and Targeting Decisions
•Positioning Decisions

Formulating Strategies and Marketing Programs

•Business strategies and marketing program decisions
Marketing Program Components
•Product and service decisions
•Pricing decisions
•Distribution decisions
•Advertising, sales promotion, and public relation decisions
•Personal selling decision

Implementing and Controlling Strategic Marketing Programs

•Implementing business and marketing strategies
•Monitoring and controlling marketing programs

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 For Further Reading

1. Kotler & Keller (2009) chapter 1

2. Boyd, Walker et.al Section 1
3. George S. Day (1994): The Capabilities of Market-
Driven Firms – A Journal of Marketing Handout.
4. Amoako, G.K. et at(2012). ‘The impact of effective
customer relationship management (CRM) on
repurchase: A case study of (GOLDEN TULIP)
hotel (ACCRA-GHANA)’ African Journal of Marketing
Management. Vol4(1) pg17-29

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