Marketing Management ppt

Course code MBA 522

Course Title Marketing Management
Credit 2

1
 Jot down your expectations and fear from
this course.

Expectations
• ………………………………………………………………………
………………………………………………………………………
…………………………………………………………..
• Fear
…………………………………………………………………………
………………………………………………………………………
…………………………………………………….
2
 Introduction to the course
• What is the purpose of marketing ?
To provide a match b/n what customer needs and what
organization able to supply.

Why is this difficult ?

 Because the external environment is volatile

 Because power shifts to consumers

 Because technology removes barriers of time and space

3
 Content of the course
1. An overview of marketing and marketing management
2. Marketing Environments
3 . Analyzing Marketing Opportunities
4 . Selecting Target markets
5. Managing Marketing Mix Elements
6. Value Chain Analysis
7 – International Marketing

4
Chapter 1- An overview of marketing and
marketing management
contents
 Marketing and its core concepts
 Philosophies of marketing
 Importance of marketing
 Scope of marketing
 Companies’ orientation to marketing
 Goals of marketing system

•
5
 Chapter objectives

• Define marketing and discuss its core concepts.

• Define marketing management and examine how
marketers
• manage demand and build profitable customer
relationships.
• Compare the five marketing management
philosophies, and
• express the basic ideas of demand management and
the creation of
• customer value and satisfaction
6
 What is Marketing?

Marketing is the delivery of customer

satisfaction at a profit.
Marketing is a social and managerial process by
which individuals and groups obtain what they
need and want through creating and
exchanging products and value with others.
(Kotler P.) 7
 Thus,
• Organizations must concentrate on the customer
and not the product or the company.
• Organizations should revolve round the customer
and not the other way around.
• The purpose of a business is to create and keep a
customer (Theodore Levitt)

8
 New view of marketing :

“Satisfying customer needs

9
 The Marketing Concept
• The Marketing Concept states that if a
business or organization is to achieve
profitability, the entire organization must be
oriented towards satisfying consumer needs,
wants and aspirations.

10
 Elements of the Marketing Concept

 Consumer/customer Orientation

 Total Organization effort

 Profitability/achievement of objectives.

11
 .
• The customer oriented organization does not
start the whole process with the product ,the
most important factor for this organization is
the customer.
• Organizations concentrate on the customer
and not the product or the company.

12
 Exercise

• In April large amount of rain has fallen around

fertile areas of Wollo .
• This is good opportunity for sorghum
production while bad for Teff unless great
efforts are made,
• Rusia and other countries demand Teff in
much amount which pleased Ethiopian
government for foreign currency.
• Estimate how much Teff & sorghum should
farmers produce for Russian Market? 13
 Market orientation
• An organization that has a market orientation
focuses its efforts on
(1) continuously collecting information about
customers’ needs,

(2) sharing this information across

departments, and
(3) using it to create customer value
14
 The Goal of Marketing :
1. Attract new customers by promising
superior value.

2. Keep and grow current customers by

delivering satisfaction

15
 Cont’d

• Marketing, more than any other business function, deals

with customers.
• Creating customer value and satisfaction are at the very
heart of modern marketing thinking and practice.
• Some people believe that only large business organizations
operating in highly developed economies use marketing, but
sound marketing is critical to the success of every
organization – whether large or small, for profit or non –
profit, domestic or global.

16
 Marketing Defined
• Many people think of marketing only as selling and advertising.
• Selling and advertising are only the tip of the marketing ice-berg.
• Marketers act as the customers’ voice within the firm and
marketers are responsible for many more decisions than just
advertising or sales:
– Analyze industries to identify emerging trends.
– Determine which national and international markets to enter
or exit.
– Conduct research to understand consumer behavior.
– Design integrated marketing mixes – products, prices,
channels of distribution, and promotion programs.

Marketing is a social and managerial process by which individuals

and groups obtain what they need and want through creating and
exchanging products and value with others.
17
 .
Marketing is all of those things and more
• .Emails Advertising Merchandising
Research Direct Mail
Surveys
Event Management

Public Relations (PR)

Product Development

Websites Questionnaires
Branding

Brochures
Sponsorship Promotions
Personal selling

18
 Cont’d
To explain marketing definition, we
examine the following important terms :
Core Marketing Concepts
 Needs, wants, and demands
 Products and services
 Value, satisfaction and quality
 Exchange, transactions, and relationships
marketing

19
 Needs, Wants, and Demands
Needs:
• The most basic concept underlying marketing is that of human needs.
• Human needs are states of felt deprivation.
• Human have many complex needs:

• Needs are states of felt deprivation.

 Physical:
Food, clothing, shelter, safety.
 Social:
Belonging, affection.
 Individual:
Learning, knowledge, self-expression.
Marketers did not create these needs; they are a
20
basic part of the human makeup
 .
Wants:
• Want are the form taken by human needs as they are shaped by
culture and individual personality.
• People have almost unlimited wants but limited resources.

• They want to choose products that provide the most value and
satisfaction for their money.
• An American needs food but wants a soft drink

Demands: Wants + Buying Power = Demand

• When backed by buying power, wants become demands.

• Consumers view products as bundles of benefits and choose

products that give them the best bundle for their money.

21
Examples of Core Concepts of Marketing

 Need – food ( is a must )

 Want – Pizza, Burger, Injera( translation of

a need as per our experience and culture)

 Demand – Burger ( translation of a want as

per our willingness and ability to buy )

 Desire – Have a Burger in a five star hotel

22
 Discussion questions

When your need is not satisfied, what

will you do ?
• Think of two options.

23
 Products and Services
Product:
• Anything that can be offered to a market to satisfy a
need or want.
• The concept of product is not limited to physical
objects – anything capable of satisfying a need can
be called a product.

Services:
• Any activity or benefit that one party can offer
to another which is essentially intangible. 24
 Values, Satisfaction, and Quality
Values:
Customer value = perceived benefits – perceived sacrifice
• Customer value is the difference between the values the
customer gains from owning and using a product and the costs
of obtaining the products.
• Customers often do not judge product value and costs accurately
or objectively. They act on perceived value.
Customers look for value
• Value = Benefit – cost
• Benefit = Functional benefit + Emotional benefit
• Cost = Monetary cost + Time cost + Energy cost + psychic cost
25
 Satisfaction:
• Customer satisfaction depends on a product’s perceived
performance in delivering value relative to a buyer’s expectation.
• If performance is lower than expectations, satisfaction is low.

• If performance is higher than expectations, satisfaction is high.

Customer satisfaction often leads to consumer loyalty.

Some firms seek to DELIGHT customers by exceeding expectations.

26
 Quality
• Customer satisfaction is closely linked to quality.

• Quality has a direct impact on product performance.

• Quality can be defined as “freedom from defects”.

• If the customer doesn't like it. it's a defect".' Customer-focused

definitions of quality suggest that a company has achieved total
quality only when its products or services meet or exceed
customer expectations.
• Thus, the fundamental aim of today's total quality movement
has become total customer satisfaction.
• Quality begins with customer needs and ends with customer
satisfaction 27
 Exchange, Transactions, and
Relationships marketing
Exchange :
• The act of obtaining a desired object from someone by offering
something in return
Transaction :
• A trade between two parties that involves at least two things of
value, agreed – upon conditions a time of agreement, and a place
of agreement.
Relationship marketing :
• The process of creating, maintaining, and enhancing strong,
value – laden relationships with customers and other
stakeholders 28
 Markets
The set of all actual and potential buyers of a product
or service
Communication

Products / Services
Industry Market (a collection
(a collection of of buyers)
sellers)
Money

Information

A simple marketing system

29
Main actors and forces in a modern marketing system

Competitors

Marketing
intermediaries End user market
Suppliers

Company
(marketer)

30
 The Scope of Marketing

To prepare to be a marketer, you need to understand

what marketing is,
how it works,
who does it, and
what is marketed

31
 What Is Marketed?

GOODS constitute the bulk of most countries’ production and

marketing efforts.
SERVICES : include the work of airlines, hotels, car rental firms,
barbers and beauticians, maintenance and repair people, and
accountants, bankers, lawyers, engineers, doctors, software
programmers, and management consultants. Many market offerings mix
goods and services, such as a fast-food meal.
EVENTS Marketers promote time-based events, such as major trade
shows, artistic performances, and company anniversaries.

32
 Importance of Marketing
• Marketing’s broader importance extends to society
as a whole.
• Marketing has helped introduce and gain acceptance
of new products that have eased people’s lives.
• It can inspire enhancements in existing products as
marketers innovate to improve their position in the
marketplace.
• Successful marketing builds demand for products
and services, which, in turn, creates jobs.
• successful marketing also allows firms to more fully
engage in socially responsible activities

33
 Concept check
• Describe the difference b/n emotional and
functional benefits with appropriate
examples.
• Define marketing and discuss how it is more
than just “telling and selling.”
• Marketing has been criticized because it
“makes people buy things they don’t really
need.” Refute or support this accusation.

34
If marketing is understood as such, what is
marketing management then?

It consists of Marketing + Management

Therefore, let us define management first

35
Management – is
-The process of performing the five managerial
functions
-The art of getting things done with and through
people
-The effective and efficient utilization of scarce
resources for achieving organization goal

36
 Marketing Management
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.

37
Marketing Management Involves:
Demand Management & Building Profitable Customer

Relationships :
• Demand Management : The organization has a desired level
of demand for its products. At any point in time, There may be
no demand, adequate demand, irregular demand, or too much
demand, and marketing management must find ways to deal
with these different demand states.
• .

38
 SIX demand states are possible:
1. Negative demand—Consumers dislike the product and may even
pay to avoid it.
2. Nonexistent demand—Consumers may be unaware of or
uninterested in the product.
3. Latent demand—Consumers may share a strong need that cannot
be satisfied by an existing product.
4. Declining demand—Consumers begin to buy the product less
frequently or not at all.
5. Irregular demand—Consumer purchases vary on a seasonal,
monthly, weekly, daily, or even hourly basis.
6. Full demand—Consumers are adequately buying all products put
into the marketplace.
39
 Building Profitable Customer Relationships

• Managing demand means managing customers.

• A company's demand comes from two groups: new

customers and repeat customers.
• Traditional marketing theory and practice have focused
on attracting new customers and making the sale.
• Today, however, the emphasis is shifting. Beyond
designing strategies to attract new customers and
create transactions with them, companies are now
going all out to retain current customers and build
lasting customer relationships. 40
 .
• Why the new emphasis on keeping customers?
• In the past, companies facing an expanding economy and rapidly
growing markets could practice the leaky bucket' approach to marketing.
• Growing markets meant a plentiful supply of new customers.
• Companies could attract new customers without worrying about losing old
customers.
• However, companies today are facing some new marketing realities.
• Changing demographics, a slow-growth economy, more sophisticated

competitors and overcapacity in many industries - all of these factors mean

that there are fewer new customers to go around. Many companies are
now fighting for shares of flat or fading markets.

Thus, the costs of attracting new customers are rising.

In fact, it costs five times as much to attract a new customer as it does to

keep a current customer satisfied.

41
1.2 MARKETING MANAGEMENT PHILOSOPHIES

• The role that marketing plays within a company varies

according to the overall strategy and philosophy of each
firm.
• There are five alternative concepts under which
organizations conduct their marketing activities:
1. Production concept
2. Product concept
3. Selling concept
4. Marketing concept
5. Societal marketing concepts 42
Four different orientations in the history of
American business

43
 Production Concept

The philosophy that consumers will favour

products that are available and highly
affordable and

that management should therefore focus on

improving production and distribution
efficiency.
• Focus on efficiency of internal operations

– if we make, they will buy it. 44

 .
• The production concept is a useful philosophy in two
types of situation.
• The first occurs when the demand for a product
exceeds the supply.
• Here, management should look for ways to increase
production.
• The second situation occurs when the product's cost
is too high and improved productivity is needed to
bring it down.

45
 Product Concept
The philosophy that consumers will favour products that offer
the most quality, performance, and innovative features.

 Focus on the technical perfection of the product/ service

seen through the producer’s (firm) eyes.
 Assumes customers will perceive product/service in the
same way and thus buy .
 A product orientation leads to obsession with technology
because managers believe that technical superiority is the
key to business success.
46
 Selling Concept
 The idea that consumers will not buy enough of the organization’s
products unless the organization undertakes a large – scale
selling and promotion effort.
• Focus on aggressive sales techniques and believe that high
sales result in high profits
• The selling 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.

47
 Marketing Concept
 The marketing management philosophy that holds
that achieving organizational goals depends on
determining the needs and wants of target
markets and delivering the desired satisfactions more
effectively and efficiently than competitors do.
 Focus on satisfying customer needs and wants
while meeting objectives –
if they will buy it, we will make
 It takes an outside-in perspective

48
 Societal Marketing Concept
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 competitors in a way that maintains
or improves the consumer’s and society’s well –
being.

49
The selling and Marketing Concepts Contrasted

Starting point
Focus Means Ends

Selling
Factory Existing products and promoting Profits through sales volume

The selling concept

Profits through customer

Market Customer needs Integrated marketing
satisfaction

The marketing concept

50
Three Considerations Underlying The Societal Marketing

Society
(Human welfare)

Societal
marketing
concept

Consumers Company
(Want satisfaction) (Profits)

51
 2. Make a visit and report.
• Go to one big Hotel in Dessie and order a meal. Note the
• questions you arc asked, and observe how special orders are
handled.
• Next go to a restaurant on your university campus and order a
meal. Quote the questions you are asked here, and observe
whether special orders are handled the same way as they are at the
Hotel .
• Did you observe any significant differences in how orders are
handled?
• Consider the differences you saw. Do you think the restaurants have
different marketing management philosophies? Which is closest to
the marketing concept? Is one closer to the selling or production
concept?
• What are the advantages of closely following the marketing concept?
Are there any disadvantages?
• A major goal for marketing is to maximize consumer
satisfaction.
• Discuss the extent to which the HOTEL & RESTAURANT serves
this goal. 52
 Discussing the Issues
1. Discuss why you should study marketing.
2. What is the single biggest difference between
the marketing concept and the production,
product and selling concepts? Winch concepts
are easiest to apply in the short run? Which
concept can offer the best long-term success?

53
Chapter 2 - The Marketing

Environment

2.1. Meaning of marketing Environment

2.2. Internal and External Marketing
environmental Elements
 CHAPTER OBJECTIVES

After this SESSION , you should be able to:

• Describe the environmental forces that affect company's ability
to serve its customers.
• Explain how changes in the demographic and economic

environments affect marketing decisions.

• Identify the main trends in the firm's natural and technological

environments.
• Explain the key changes that occur in the political and cultural

environments.

55
 Marketing Environment

• The marketing environment consists of actors

and forces outside the organization that affect
management’s ability to build and maintain
relationships with target customers.
• Environment offers both opportunities and threats.

• Marketing intelligence and research used to collect

information about the environment.

 Marketing Environment
• Includes:
1. Microenvironment: actors close to the company that affect its ability
to serve its customers.
 The micro environment is made up of factors that are close to the firm
and affect it on a 'day to day' basis; usually these factors interract with
the firm.
 examples include
 customers, banks and trade unions as they all interract with the firm.
Competitors are also part of the micro environment because they are
selling competing products, their activity could have a direct impact on
the firm's daily business.
 2. Macro environment
• is made up of factors that affect the firm on a long term basis.

• In general macro environment factors are not close to the firm.

• Micro environment factors could be national or global measures
and affect many industries and groups.
• Examples include

• legislation, the economy (e.g. recession, inflation, VAT changes),

and technological change such as the internet.
• Macro environment factors are uncontrollabe factors but still
influence company strategy.

58
 Company’s micro environment.
• Company’s Internal Environment:

– Areas inside a company.

– Affects the marketing department’s planning

strategies.
– All departments must “think consumer” and
work together to provide superior customer
value and satisfaction.
Actors in the Microenvironment
 The Company’s Microenvironment

• Suppliers:
– Provide resources needed to produce goods and
services.
– Important link in the “value delivery system.”

– Most marketers treat suppliers like partners.

 The Company’s Microenvironment

• Marketing Intermediaries:
– Help the company to promote, sell, and
distribute its goods to final buyers
• Resellers
• Physical distribution firms
• Marketing services agencies
• Financial intermediaries
 The Company’s Microenvironment
• Customers:
– Five types of markets that purchase a
company’s goods and services
• Suspects: who aren’t even aware yet how much they need
your product or service.
• Prospects: prospects are known and by this point are
typically either in contact with a sales representative of the
company or in some other way have reached out to learn
more about your brand and products.
 Customers (cont’d)
• New customers: Individuals who have bought
the product for the first time.
•Repeat customers:They are continuing to purchase
your product and maybe by this time they have tried
other products
•Advocates: These customers have an emotional
connection with the brand, trust in the company’s
products and employees to support them and will
personally recommend you to others.
64
 The Company’s Microenvironment
• Competitors:
Those who serve a target market with products and
services that are viewed by consumers as being
reasonable substitutes
Company must gain strategic advantage against
these organizations
 Publics: Group that has an interest in or impact on an
organization's ability to achieve its objectives
 Types of customers Markets

Consumer markets consist of individuals and

households that buy goods and services for personal
consumption.
Business markets buy goods and services for further processing
or for use in their production process, whereas
reseller markets buy goods and services to resell at a profit. 66
 .
Institutional markets are made up of schools, hospitals, nursing
homes, prisons and other institutions that provide goods and
services to people in their care.

Government markets are made up of government agencies that

buy goods and services in order to produce public services or
transfer the goods and services to others who need them.

International markets consist of buyers in other countries,

including consumers, producers, resellers and governments.

Each market type has special characteristics

67
Types of Publics
 public
• Any group that has an actual or potential interest in or impact
on an organization's ability to achieve its objectives
• Financial publics. Financial publics influence the company's
ability to obtain funds. Banks, investment houses and
stockholders are the principal financial publics.
• Media publics. Media publics are those that carry news, features
and editorial opinion. They include newspapers, magazines and
radio and television stations,
• Government public. Management must take government
developments into account.

69
 .
• Citizen action publics. A company's public relations
department can help it stay in touch with consumer and citizen
groups.
• Local publics. Every company has local publics, such as
neighbourhood residents and community organizations.
• General public. A company needs to be concerned about the
general public's attitude towards its products and activities.

Internal publics. A company's internal publics include its

workers, managers, volunteers and the board of directors. Large
companies use newsletters and other means to inform and
motivate their internal publics.

When employees feel good about their company, this positive

attitude spills over to their external publics. 70
 The Macroenvironment
• The company and all of the other actors operate in a

larger macro environment of forces that shape

opportunities and pose threats to the company.

• Firm's macro environment can be analysed through

a PEST Analysis
The Company’s Macroenvironment
 THE UNCONTROLLABLE MARKETING
.
FORCES

• . Social
Social

Natural
Natural

Economic
Economic

Technologic
Technologic
External
External
Environmental
Environmental
Factors Political
Politicaland
andLegal
Legal
Factors

Competitive
Competitive

73
Helps identify market opportunities
 The Company’s Macroenvironment
Demographic:
The study of human populations in terms of size,
density, location, age, gender, race, occupation, and
other statistics.
Marketers track changing age and family structures,
geographic population shifts, educational
characteristics, and population diversity.
 Economic Environment

Consists of factors that affect consumer

purchasing power and spending
patterns.
• Income
Distribution
– Upper class
– Middle class
– Working class
– Underclass
 Natural Environment

• Involves the natural

resources that are
needed as inputs by
marketers or that are
affected by marketing
activities.
Factors Impacting the Natural Environment

Shortages of Raw Materials

Increased Pollution

Increased Government Intervention

Environmentally Sustainable Strategies

 Technological Environment
• Most dramatic force now shaping our destiny
• Changes rapidly.
• Creates new markets and opportunities.
• Challenge is to make practical, affordable products.
• Safety regulations result in higher research costs and
longer time between conceptualization and introduction
of product.
 Political Environment
• Marketing decisions are strongly affected by developments in
the political environment.
• The political environment consists of laws, government
agencies and pressure groups that influence and limit various
organizations and individuals in a given society

79
 Political Environment

Includes Laws,
Increasing Legislation
Government
Agencies, and
Pressure Groups
Changing Government
that Influence or Agency Enforcement
Limit Various
Organizations and
Individuals In a Increased Emphasis on Ethics
Given Society. & Socially Responsible Actions
 Cultural Environment
• The institutions and other forces that affect a society’s basic
values, perceptions, preference, and behaviors.
• The cultural environment is made up of institutions and other
forces that affect society's basic values, perceptions, preferences
and behaviours. People grow up in a particular society that
shapes their basic beliefs and values.
• They absorb a world-view that defines their relationships with
others. The following cultural characteristics can affect marketing
decision making. Marketers must be aware of

these cultural influences and how they vary across societies within

the markets served by the firm .

 Cultural Environment

• Core beliefs and values are passed on

from parents to children and are
reinforced by schools, churches, business,
and government.

• Secondary beliefs and values are more

open to change.
 PEST -Analysis
Political
• The first element of a PEST analysis is a study of political factors.
• Political factors influence organisations in many ways.
• Political factors can create advantages and opportunities for
organizations.
• Conversely they can place obligations and duties on
organizations.
•

.
• .
•
83
 Political factors include the following types of instrument :
• Legislation
- Market regulations
- Trade agreements, tariffs or restrictions
- Tax levies and tax breaks
- Type of government regime e.g. communist,
democratic, dictatorship

84
 Economical
• All businesses are affected by national and global economic factors.

• National (and global) interest rates and fiscal policy is set around
economic conditions.
• An economy undergoing recession will have high unemployment, low
spending power and low stakeholder confidence.
• A successful organization will respond to economic conditions and
stakeholder behavior.
• Furthermore organizations will need to review the impact economic
conditions are having on their competitors and respond accordingly..
•.

85
 Social
• Social forces affect our attitudes, interests and opinions.
• These forces shape who we are as people, the way we behave and
ultimately what we purchase.
• Population changes also have a direct impact on organizations.
Changes in the structure of a population will affect the supply and
demand of goods and services within an economy.
• Falling birth rates will result in decreased demand and greater
competition as the number of consumers fall.
• In summary organizations must be able to offer products and services
that aim to complement and benefit people’s lifestyle and behavior.
• If organizations do not respond to changes in society they will lose
market share and demand for their products and services

86
 Technological
Technological advances have greatly changed the manner in which
businesses operate.
Organizations use technology in many ways, they have Technology
infrastructure , Technology systems incorporating a multitude of software ,
Technology hardware such as mobile phones, computers, photocopiers and
fax machines which transmit and record information.
 A faster exchange of information can benefit businesses as they are able
to react quickly to changes within their operating environment.
However an ability to react quickly also creates extra pressure as
businesses are expected to deliver on their promises within ever decreasing
time scales.

. Technology will continue to evolve and impact consumer habits and

expectations, organizations that ignore this will hinder success
87
 Responding to the Marketing Environment
• Environmental Management Perspective
• Taking a proactive approach to managing the
environment by taking aggressive (rather than
reactive) actions to affect the publics and forces in
the marketing environment.
• This can be done by:
– Hiring lobbyists
– Running “advertorials”
– Pressing lawsuits
– Filing complaints
– Forming agreements to control channels
 Discussion question
Some marketing goals, such as improved quality,
require strong support from an internal public – a
company's own employees. But surveys show that
employees increasingly distrust management and
that company loyalty is eroding. How can a
company market internally to help meet its goals?

89