Unit - I: Understanding Marketing Management: Importance and scope of Marketing,

Core Marketing Concepts, Marketing Mix, New Marketing Realities, Evolution of modern
marketing concept; holistic marketing; Elements of Marketing - Needs, Wants, Demands,
Consumer, Markets and Marketers; Marketing Vs Selling. Marketing management process-a
strategic perspective, Components of a Modern Marketing Information System. Marketing
Environment: Significance of scanning marketing environment; Analyzing macro
environments of marketing-economic, demographic, socio-cultural, technological, political
and legal; Impact of micro and macro environment on marketing decisions.

1. 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).
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. What is marketed
Goods - Physical goods constitute the bulk of most countries’ production and marketing
efforts.
Services - As economies advance, a growing proportion of their activities focuses on the
production of services.
Events - Marketers promote time-based events, such as major trade shows and artistic
performances. Global sporting events such as the Olympics and the World Cup are promoted
aggressively.
Experiences - By orchestrating several services and goods, a firm can create, stage, and
market
experiences.
Persons - Artists, musicians, CEOs, physicians, high-profile lawyers and financiers, and other
professionals all get help from celebrity marketers.
Places - Cities, states, regions, and whole nations compete to attract tourists, residents,
factories, and company headquarters.
Properties - Properties are intangible rights of ownership to either real property (real estate)
or
financial property (stocks and bonds).
Organizations - Organizations work to build a strong, favorable, and unique image in the
minds of their target publics.
Information - The production, packaging, and distribution of information are major
industries.
Ideas - Social marketers are busy promoting social ideas.

Marketer - A marketer is someone who seeks a response (attention, a purchase, a vote, a

donation) from another party, called the prospect. If two parties are seeking to sell something
to each other, we call them both marketers.
3. Markets - Marketers often use the term market to cover various groupings of customers.
Following are key customer markets -
Consumer market - 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.
Business market - Business buyers buy goods to make or resell a product to others at a
profit.
Global market - 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.
Non - profit & government market - Companies selling to nonprofit organizations with
limited purchasing power such as universities, charitable organizations, and government
agencies need to price carefully.

Marketplace refers to physical market.

Market space refers to the digital market.
Metamarket refers to a cluster of complimentary products & services that are closely related
in the minds of consumers but are spread across a diverse set of industries.

4. Importance of Marketing
1. It creates the acceptance of new products which ease the life of the people.
2. It create the demand for products which in turn create jobs.
3. It enhances brand loyalty which further increases the value of the firm.
For consumers it creates utility (usefulness that consumers receive from a product)
Form utility – benefit marketing provides by transforming raw materials into finished
products.
Place utility – benefit by making products available where customers want them.
Time utility – benefit by storing products until they are needed.
Possession utility – benefit by allowing customers to own, use & enjoy the product.
For firm it creates demand to make profit
5. Marketing Concepts
Needs, Wants and Demands - Needs are the basic human requirement. Eg food, air, shelter.
Needs become wants when they are directed to specific objects that might satisfy the need.
Demands are wants for specific products backed by an ability to pay.
Offering and Brands - The value proposition is the set of benefits that companies offer to
customers to satisfy their needs. Offering is the physical conversion of the intangible value
proposition, which can be a combination of products, services, information & experiences.
Value and Satisfaction - Value reflects the perceived tangible & intangible benefits & costs
to customers. Value is the combination of quality, service & price called customer value
triad. Satisfaction reflects a person’s comparative judgments resulting from a product’s
perceived performance in relation to his expectations. If performance falls short of
expectations, customer is dissatisfied. If it matches, customer is satisfied and if performance
exceeds expectations, customer is highly satisfied or delighted.
Brand - Brand is a name, term, sign, symbol, or design or a combination of them, intended to
identify the goods or services of one seller or group of sellers and to differentiate them from
those of competitors. A brand is an offering from a known source.
Segmentation – Identifying distinct groups of buyers, who differ in their needs, by
examining demographic, psychographic & behavioral differences among buyers.
Targeting is selecting one or more segments to enter.
Positioning - is the act of designing the company’s offering and image to occupy a distinct
place in the mind of target market. Positioning helps marketing strategy by clarifying the
brand’s essence, what goals it helps the consumer to achieve & how it does so in a unique
way.
Marketing Channels – includes channels to carry out marketing activities.
Communication channels – to deliver & receive messages from target buyers & include
newspapers, TV, posters, internet. Also includes dialogue channels like (e mail & toll-free
numbers)
Distribution channels – to display, sell or deliver the physical product or service to the
buyer and includes distributors, retailers, wholesalers, and agents.
Service Channels – Marketers use service channels to carry out transaction with buyers. It
includes warehouses, transportation companies, banks and insurance companies that facilitate
transactions.
Supply Chain - It describes a channel stretching from raw materials to the final products that
are carried to final buyers. It represents a value delivery system & each company captures
only a certain percentage of the total value generated by the supply chain.
Competition - It includes all the actual and potential rival offerings and substitutes that a
buyer might consider.
Marketing Environment - It refers to the forces in the environment in which the marketer
operates.
Task Environment – It includes the immediate actors involved in producing, distributing &
promoting the offering. The main actors are company, suppliers, distributors, dealers & the
target customers.
Broad Environment – It consists of six components – demographic, economic, physical,
technological, political – legal & socio – cultural. These can have a major impact on the
actors in task environment.
Marketing Planning - The marketing planning consists of analyzing marketing
opportunities, selecting target markets, designing marketing strategies, developing marketing
programs, & managing the marketing effort.

6. Marketing Philosophy - It refers to the concepts under which organizations have

conducted marketing activities. It decides what relative weight should be given to the
interests of organization, consumer, and society.
Production Concept – It is the oldest concept in marketing. It holds that consumers will
prefer products that are widely available & inexpensive. Organization concentrates on high
production efficiency, low costs & mass distribution.
Product Concept - It assumes that consumer favor those products that offer the most quality,
performance & innovative features. Organization’s focus is on making superior products &
improving them over the time. The problem is that a new or improved product may not
necessarily be successful.
Selling Concept - It holds that consumers and businesses if left alone, will ordinarily not buy
enough of the organization’s products. The organization takes aggressive selling promotional
effort. It is practiced most aggressively with unsought goods. It carries high risk of bad
mouth.
Marketing Concept - It emerged in mid – 1950s. It has customer centered, “sense &
respond” approach. Main job is to find right product for customers. It holds that key to
achieving organizational goals consists of the company being more effective than competitors
in creating communicating & delivering superior value to its chosen target markets.
Reactive Market Orientation - Understanding & meeting customer’s expressed needs
Proactive Market Orientation - Practice of researching latent needs through a probe &
learn process. Companies that practice both a reactive & proactive marketing orientation are
implementing a total market orientation.
Holistic Marketing - It is based on the development, design and implementation of
marketing programs, processes and activities that recognizes their breadth and
interdependencies. It recognizes that everything is necessary with marketing and a broad,
integrative perspective is necessary.
Holistic Marketing has four components
1 Relationship Marketing
2 Integrated Marketing
3 Internal Marketing
4 Performance Marketing
Relationship Marketing - It aims at building mutually satisfying long-term relationship with
key parties – customers, suppliers, distributors & other marketing partners, in order to earn &
retain business. Four key constituents for marketing are
a. customers b. employees c. marketing partners (distributors, dealers, agencies) d. financial
community (investors, shareholders)
The outcome of relationship marketing is building of a unique company asset called
marketing network. Competition is not between companies but between marketing networks,
with the award going to the company with the best marketing network. The development of
strong relationship requires an understanding of the capabilities & resources of different
groups as well as their needs.
Integrated Marketing - Two key themes of integrated marketing are that (i) many different
marketing activities are employed to communicate & deliver value (ii) All marketing
activities are coordinated to maximize their join effects.
These marketing activities has been depicted in terms of “Marketing Mix”, which has been
defined as set of marketing tools, the firm uses to pursue its marketing objectives.
Components of Marketing Mix

Internal Marketing - It is the task of hiring, training & motivating able employees who want
to serve customers well. Internal marketing takes place at two levels
1 All marketing functions must be coordinated from customer point of view.
2 Marketing must be embraced by other departments; they must also “think customer”
Performance Marketing - Understanding the financial and non – financial returns to
business and society from marketing activities and programs.
Cause related Marketing – Basically it is an agreement between a business entity & a non-
profit to raise money for a particular cause.
Marketing Vs Selling

7. The New Marketing Realities

What global forces affect marketing?

Marketers have to adapt to major societal forces that govern behavior including societal
forces such as network information, globalization, deregulation, privatization, heightened
competition, industry convergence, retail transformation, disintermediation, consumer buying
power, consumer information, consumer participation, and consumer resistance.

What new capabilities do companies have?

The Information Age provides both marketers and consumers with investigations of
information and knowledge. It digitalizes transactions, vastly increasing the size of the
marketplace to global levels and increasing the ease of acquiring a particular product. There
has been a substantial increase in consumers’ buying power, putting marketers under
heightened competition. Companies recognize that to move ahead, they have to tap
opportunities lying at the intersections of two industries and utilize varying and unorthodox
means to market their products. Marketers can tap into social media and mobile marketing to
reach their target markets.
8. Marketing information system (MIS) - A marketing information system (MIS) consists
of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed,
timely, and accurate information to marketing decision makers. It relies on internal company
records, marketing intelligence activities, and marketing research.

Internal Records
To spot important opportunities and potential problems, marketing managers rely on internal
reports of orders, sales, prices, costs, inventory levels, receivables, and payables. The Order-
to-Payment Cycle is the heart of the internal records system. Sales representatives, dealers,
and customers send orders to the firm. The sales department prepares invoices and transmits
copies to various departments. Shipped items are accompanied by shipping and billing
documents that go to various departments.
Sales information system conveys real-time information on sales directly from sales outlets.
It provides a breakdown of product sales, revenue, and new products to consider.

Marketing Intelligence System

It is a set of procedures to gather information about what is happening in the market. Sources
of information include:
Customers - They provide feedback on products.
Employees and partners - They pass on relevant customer information back to the company.
Third parties - These include well-known data suppliers, government released data, and
competitors’ reports and datasheets. The Internet, online review boards, discussion forums,
chat rooms, and blogs are rich sources of intelligence.

Marketing research is the systematic design, collection, analysis, and reporting of data and
findings relevant to a specific marketing situation facing the company.

9. Marketing Environment
A business unit must monitor key macroenvironment forces (demographic-economic,
natural, technological, political-legal, and social-cultural) and significant microenvironment
actors (customers, competitors, suppliers, distributors, and dealers) that affect its ability to
earn profits. The business unit should set up a marketing intelligence system to track trends
and important developments and any related opportunities and threats.
A marketing opportunity is an area of buyer need and interest in which there is a high
probability that a company can profitably satisfy that need. Opportunities can take many
forms, and marketers have to be good at spotting them. Following can be some of forms of
opportunities.
A company may benefit from converging industry trends and introduce hybrid
products
or services that are new to the market. Major mobile phone manufacturers have released
phones with multimedia capabilities and apps.
A company may make a buying process more convenient or efficient. Consumers can
now use the Internet to search for the lowest price for several products with a few clicks.
A company can meet the need for more information and advice.
A company can customize a product or service that was formerly offered only in a
standard form. Timberland offer customized shoes with varied combinations of colors for
individual buyers.
A company can introduce a new capability. Apple’s iPad allowed consumers to access
emails, play games, and watch movies on a convenient-to-carry touch pad.
A company may be able to deliver a product or a service faster. Taiwanese contract
manufacturers excel in the speedy design, manufacture, and delivery of a variety of
computer-related products and components.
A company may be able to offer a product at a much lower price. Pharmaceutical firms
like Ranbaxy sell generic versions of brand-name drugs.

An environmental threat is a challenge posed by an unfavorable trend or development that

would lead, in the absence of defensive marketing action, to lower sales or profit.

Analyzing the Macroenvironment

Many opportunities are found by analyzing the macro environment. Markets respond to
major forces that influence the market, namely demographic, economic, sociocultural,
environmental, technological, and political-legal.
Demographic Factors - Population growth is one of the main concerns of any market, but it
does not mean a growing market unless it is accompanied with an increase in buying power.
There is a growing population in developed countries of older and more affluent populations,
hence affecting the population age mix. Thus, products should be dedicated to meeting an
aging population’s needs.
The marketer has to cater to the linguistic, racial, and religious needs and wants of a market.
The composition of a family unit affects their spending habits. The level of geographical shift
in populations between less wealthy and affluent countries affects the type of product a
company can offer.
Economic factors - The level of income disparity in a country across locations and social
stratum affects the type of product offered in different regions. A population’s propensity to
save (e.g., Western versus Asian economies) must also be considered. The level of debt and
credit availability in a country is a reflection of the health of the economy. A country with
more liquid finances implies greater spending, which marketers can tap on to develop more
sophisticated products.
Socio-cultural factors - A market is determined by customers’ views of themselves, society,
and nature, as well as their cultural values.
Natural environment - There is increasing concern for the state of the environment due to
greater awareness of environmental issues. Companies have responded by focusing on the
development of greener products and eco-friendly practices.
Technological factors - Technology shrinks some markets and paves the way for others to
emerge. The rapid pace of development creates continuously shifting and overlapping target
markets.
Political-legal factors - Governments impose regulations to protect the goals and needs of
the country. Governments charge companies with the perceived social costs their products or
practices have on the market. Companies practicing unfair methods of competition are also
clamped down on to protect the interests of fellow companies. Some regulations also protect
local companies that do not have the ability to compete with the economies of scale and
marketability that multinational companies enjoy.
Regulations on counterfeiting are also increasing. The rise of Special Interest Groups to
support
consumerism imposes more responsibility on companies in terms of their product pricing,
advertisements, and quality.

Micro - environment – It includes actors (customers, competitors, suppliers, distributors,

and dealers) that affect its ability to earn profits. In a sense, all firms compete with other
firms for consumers’ limited spending power. For most practical purposes, though,
consideration of the competition is limited to firms providing similar solutions to the same
customer problem. Much business strategy is concerned with establishing the firm in a
suitable competitive position. The pool of customers, the nature of them, the different
segments of the market made up of people with slightly different needs, will all affect the
firm. In the supplier group are material suppliers and service suppliers, such as marketing
research agencies, advertising agencies, banking and insurance companies, transportation
companies, and telecommunications companies. Distributors and dealers include agents,
brokers, manufacturer representatives, and others who facilitate finding and selling to
customers.

10. Marketing Management Process: Strategic Perspective

The marketing management process consists of the following steps.
1. Defining Corporate and business unit objectives
Many firms - particularly larger organizations with multiple divisions or business units -
develop a hierarchy of interdependent strategies. Each strategy is formulated at varying levels
within the firm and deals with a different set of issues.
Corporate strategy reflects the company’s mission and provides direction for decisions about
what businesses it should pursue, how it should allocate its available resources, and its
growth policies. Business-level strategy addresses how the business intends to compete in its
industry.

2. Market opportunity analysis – Understanding the nature and attractiveness of any

opportunity requires an examination of the external environment, including the markets to be
served and the industry of which the firm is a part. In turn, this examination involves a look at
broad macro issues like environmental trends that are driving or constraining market demand
and the structural characteristics of the industry as a whole, as well as specific aspects of the
firm and what it brings to the party. This can be done with the help of 5Cs (company,
collaborator, competitors, customers, and context) analysis.
The primary purpose of marketing activities is to facilitate and encourage exchange
transactions with potential customers. One of a marketing manager’s major responsibilities is
to analyze the motivations and behavior of present and potential customers.
It requires understanding customer behavior by doing forecasting and research and taking the
STP (segmentation, targeting and positioning) decisions.
Market Segmentation, Targeting, and Positioning Decisions
One of the manager’s most crucial tasks is to divide customers into market segments -
distinct subsets of people with similar needs, circumstances, and characteristics that lead
them to respond in a similar way to a particular product or service offering or to a particular
strategic marketing program.
After defining market segments and exploring customer needs and the firm’s competitive
strengths and weaknesses within segments, the manager must decide which segments
represent attractive and viable opportunities for the company; that is, on which segments to
focus a strategic marketing program.
Finally, the manager must decide how to position the product or service offering and its brand
within a target segment; that is, to design the product and its marketing program so as to
emphasize attributes and benefits that appeal to customers in the target segment and at once
distinguish the company’s brand from those of competitors.

3. Goal formulation - Once the company has performed a SWOT analysis, it can proceed to
goal formulation; the development of specific goals for the planning period. Goals are
objectives that are specific with respect to magnitude and time.

4. Developing strategic marketing programs – It includes formulation of business

strategies and decisions related to product, price, place, and promotion.
Specifying Marketing Objectives and Strategies - The first step in developing a strategic
marketing program is to specify the objectives and the overall marketing strategy of each
target market.
The interrelated decisions about market segments, product line, advertising appeals and
media, prices, and partnerships with suppliers, distributors, retailers, and other agencies all
reflect a firm’s marketing strategy. This is the company’s plan for pursuing its objectives
within a particular product market.

Marketing Program Components - Dozens of specific tactical decisions must be made in

designing a strategic marketing program for a product-market entry. These decisions fall into
four categories of major marketing variables that a manager has some ability to control over
the short term. Often called the 4 Ps, the controllable elements of a marketing program are the
product offering (including the breadth of the product line, quality levels, and customer
services); price; promotion (advertising, sales promotion, and salesforce decisions); and place
(or distribution). Because decisions about each element should be consistent and integrated
with decisions concerning the other three, the four components are often referred to as the
marketing mix.

4. Organizing and planning for implementation

A final critical determinant of a strategy’s success is the firm’s ability to implement it
effectively. And this depends on whether the strategy is consistent with the resources, the
organizational structure, the coordination and control systems, and the skills and experience
of company personnel. Managers must design a strategy to fit the company’s existing
resources, competencies, and procedures - or try to construct new structures and systems to fit
the chosen strategy.

5. Measuring marketing performance

The final tasks in the marketing management process are determining whether the strategic
marketing program is meeting objectives and adjusting the program when performance is
disappointing. This measurement and control process provides feedback to managers and
serves as a basis for a market opportunity analysis in the next planning period.
Measures of Market Demand
Forecasts depend on which type of market is being considered.
1 Potential market – It is the set of consumers who profess a sufficient level of interest in a
market offer. However, consumer interest is not enough to define a market.
2 Available market – It is the set of consumers who have interest, income & access to a
particular offer. The qualified available market constitutes the set of consumers who have
interest, income, access & qualifications for a particular market offer.
3 Target Market – It is the part of the qualified available market the company decides to
pursue.
4 Penetrated market – It is the set of consumers who are buying the company’s product.
Demand Measurement
Market Demand – Market demand for a product is the total volume that would be bought by
a defined customer group in a defined geographical area in a defined time period in a defined
marketing environment under a defined marketing program. It is not a fixed number rather a
function of the stated conditions, hence can be called as marketing demand function.
Marketing Forecast – Only one level of marketing expenditure (program) will actually
occur. The market demand corresponding to this level is called market forecast.
Market Potential – The level of market demand resulting from a very high level of industry
marketing expenditure, where further increases on marketing effort would have little effect in
stimulating further demand.
It is the limit approached by market demand as industry marketing expenditures approach
infinity for a given marketing environment.
Company Demand – It is the company’s estimated share of market demand at alternative
levels of company marketing effort in a given time period.
The company’s share of market demand depends on how its products, services, prices,
communications & so on are perceived relative to the competitors.
If other things are equal, the company’s market share would depend on the size &
effectiveness of its marketing expenditures relative to the competitors.
Company Sales Forecast – It is the expected level of company sales based on a chosen
marketing plan & an assumed marketing environment.
Company Sales Potential – It is the sales limit approached by company demand as company
marketing effort increases relative to that of competitors. The absolute limit of company
demand is the market potential.