MARKETING MANAGEMENT

Maria Luisa Quiroz-MinesesProfessor

PART 1

OVERVIEW OF MARKETING MANAGEMENT

WAYS IN WHICH AN ORGANIZATION MAY SURVIVE

1. Through power

2. Through solicitation

3. Through exchange

WAYS TO OBTAIN A PRODUCT CAPABLE OF SATISFYING A NEED

a. Self production - 1st option

b. Coercion - 2nd option

c. Supplication - 3rd optiond. Exchange - 4th option

Conditions to Satisfy in Order to Have Exchange

a. There are two or more parties.

b. Each party has something that could be of value to the other.

c. Each party is capable of communication and delivery.

d. Each party is free to accept or reject the offer.

ELEMENTS OF AN ORGANIZATION’S PURPOSE

1. History of the Organization

2. Current preferences of management and owners

3. Environmental considerations

4. Resources

5. Distinctive competences

CIRCUMSTANCES THAT TRIGGERED INTEREST IN MARKETING

1. Sales decline

2. Slow growth

3. Changing buying patterns

4. Increasing competition

5. Increasing sales expenditures

ENTITIES BEING MARKETED

1. Goods

2. Services

3. Events

4. Experiences

5. Persons

6. Places

7. Properties

8. Organizations

9. Information

10. Ideas

PART 2

MARKETING MANAGEMENT IN THE 21st CENTURY

Marketing - 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

CORE MARKETING CONCEPTS

A. Target markets, positioning and segmentation

Target market - the part of qualified available market the company decides to pursue

Market positioning - arranging for a product to occupy a clear, distinctive and desirable place relative to competing products in the minds of target consumers.

Market segmentation - dividing a market into distinct groups of buyers who have distinct needs, characteristics or behavior and who might require separate products or marketing mixes.

B. Marketers and prospect

Marketer - someone who seeks a response from another party

Prospect - individual to whom a product is being offered

C. Needs, Wants and Demands

Need - the basic human requirement

Wants - they are desires for specific objects that might satisfy the need

Demands - are wants for specific products backed by an ability to pay

Demand States

1. Negative Demand - a state in which consumers dislike the product or service and may even pay a price to avoid it.

2. Nonexistent Demand - a state were consumers may be unaware of or uninterested in the product

3. Latent Demand - a state were consumers may share a strong need that cannot be satisfied by an existing product or service.

4. Declining Demand - a state in which consumers begin to buy or patronize the product or service less frequently or not at all

5. Irregular Demand - is a state in which consumer purchases vary on a seasonal basis

6. Full Demand - is a state in which customers are adequately buying all products put into the marketplace

7. Overfull Demand - a state in which demand exceeds the level at which the marketer feels able or motivated to supply it.

8. Unwholesome Demand - a state in which consumers may be attracted to products that have undesirable social consequences.

D. Product or Offerings

Product - any offering that can satisfy a need or want

Offering - product or service that is being proposed for consideration

E. Value and Satisfaction

Value - ratio between what the customer gets and what he gives

Satisfaction - reflects a person’s judgments of a products perceived performance in relationship to expectations

F. Exchange and transactions

Exchange - involves obtaining a desired product from someone by offering something in return

Transaction - a trade of values between two or more parties

G. Relationships and network

Relationship marketing - aims to build long-term mutually satisfying relations with key parties

Marketing network - consist of the company and its supporting stakeholders

H. Marketing Channel - sets of interdependent organizations involved in the process of making a product or service available for use or consumption

Kinds of Marketing Channels

1. Communication channels - deliver and receive messages from target buyers

2. Distribution channels - displays, sell or deliver the physical product or services to the buyers or users

3. Service channels - carry out transactions with potential buyers

I. Supply Chain

J. Competition - includes all the actual and potential rival offerings and substitutes a buyer might consider.

Levels of Competition

1. Brand competition - competition where companies see its competitors as other companies offering a similar product and service to the same customer at similar prices

2. Industry competition - competition where companies see its competitors as all companies making the same product or class of products

3. Form competition - competition where companies see its competitors as all companies manufacturing products that supply the same service

4. Generic competition - competition where companies see its competitors as all companies that compete for the same consumer money

K. Marketing Environment

Composition of a Marketing Environment

1. Task environment - includes the actors engaged in producing, distributing and promoting the offer

2. Broad environment - composed, of the demographic, economic, physical, technological, political and social cultural environment

L. Marketing mix - the set of marketing tools that the firm uses to pursue its marketing objectives in the target market

MAJOR SOCIETAL FORCES

1. Network information technology

2. Globalization

3. Deregulation

4. Privatization

5. Heightened competition

6. Consumer resistance

7. Retail transformation

8. Disintermediation

NEW CONSUMER CAPABILITIES

1. Substantial increase in buying power

2. Greater variety of available goods and services

3. Greater amount of information about practically anything

4. Greater ease in interacting and placing and receiving orders

5. Ability to compare notes on products and services

6. An amplified voice to influence peer and public opinion

Marketing Management - is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value

CONCEPTS IN CONDUCTING MARKETING ACTIVITY

1. Production concept - holds that consumers will prefer products that are widely available and inexpensive.

2. Product concept - proposes that consumers favor products that offer the most quality, performance or innovative features

3. Selling concept - holds that consumers and businesses, if left alone, won’t buy enough of the organization’s products

4. Marketing concept - holds that the key to achieving organizational goal is being more effective than competitors in creating, delivering and communicating superior customer value to chosen markets

5. Holistic marketing concept - an approach that attempts to recognize and reconcile the scope and complexities of marketing activities

Relationship marketing - aims to build mutually satisfying long-term relationships with key constituents in order to retain their business

Part 3

DEVELOPING MARKET STRATEGIES AND PLAN

Market-oriented strategic planning - the managerial process of developing and maintaining viable fit between the organization’s objectives, skills and resources and its changing market opportunities

CORPORATE PLANNING ACTIVITIES

1. Defining corporate mission

Mission statement - a statement of the organization’s purpose and what it wants to accomplish in the larger environment

Characteristics of a Good Mission Statement

a. Focus on a limited number of goals

b. Stress the company’s major policies and values

c. Define major competitive spheres within which the company will operate

2. Establishing strategic business units

Strategic business units [SBU] - a single business unit or collection of related business that can be planned separately from the rest of the company

3. Assigning resources to each SBU

4. Assessing growth opportunities

STRATEGIC PLANNING GAP

1. Intensive growth opportunities - identify opportunities to achieve further growth within the company’s current businesses

Intensive Growth Strategies

a. Market penetration strategy - considers whether the company could gain more market share with its current products in their current markets

b. Market development strategy - considers whether the company can develop new products of potential interest to its current markets

c. Product development strategy - considers whether it can develop new products of potential interest to its current markets

2. Integrative growth opportunities - identify opportunities to build or acquire businesses that are related to the company’s current businesses.

Integrative Growth Opportunities

a. Backward integration - consists of a company seeking ownership or increased control of its supply systems.

b. Forward integration - consist of a company seeking ownership or increased control of its distribution system

c. Horizontal integration - consist of a company seeking ownership or increased control of some of its competitors

3. Diversification growth opportunities - identify opportunities to add attractive businesses that are unrelated to the company’s current businesses

Types of Diversification Moves

a. Concentric diversification - the company could seek new products that have technological and or marketing synergies with the existing product line even though new product appeals to a different groups of customers

b. Horizontal diversification - the company might search for new products that could appeal to its current customers even though the new products are technologically unrelated to its current product line

c. Conglomerate diversification - the company might seek new businesses that have no relationship to the company’s current technology, products or market

BUSINESS UNIT STRATEGIC PLANNING PROCESS

1. Business mission

2. SWOT analysis

Types of Business Based on Opportunity-Threat

a. Ideal business - one in which is high in major opportunities and low or devoid of major threats.

b. Speculative business - high in both major opportunities and threats.

c. Mature business - is low in major opportunities and threats.

d. Troubled business - low in opportunities and high in threats.

3. Goal formulation

Criteria in Goal Formulation

a. They must be arranged hierarchically

b. Objectives should be quantitative whenever possible

c. Goals should be realistic

d. Objectives must be consistent

4. Strategic formulation

Categories of Strategic Alliance

a. Product or service alliance - when one company licenses another to produce its product, or two companies jointly market their complementary products or a new product

b. Promotional alliance - when one company agrees to carry promotion for another

c. Logistics alliance - when one company offers logistical services for another company’s product

d. Pricing collaborations - when one or more companies join in a special pricing collaboration

5. Program formulation and implementation

6. Feedback and control

PART 4

GATHERING INFORMATION AND SCANNING THE

ENVIRONMENT

Marketing intelligence system - a set of procedures and sources used by managers to obtain everyday information about developments in the marketing environment

Marketing Environment - is the totality of forces and institutions that are external and potentially relevant to the firm.

ENVIRONMENTAL DEGREE OF STABILITY

1. Stable environment

2. Slowly evolving environment

3. Turbulent environment

TASKS IN A TURBULENT ENVIRONMENT

1. Systematically scanning its environment.

2. Identifying environmental threats and opportunities.

3. Making intelligent adaptations to the changing environment.

MAJOR COMPONENTS OF MARKETING ENVIRONMENT

1. Demographic environment - consist of factors that concern the human population

2. Economic environment - consists of factors that affect consumer purchasing pattern and spending patterns

Concerns of the Economic Environment

a. Changes in income - decline in income will result in cautious buying

b. Changing consumer spending patterns - as people’s income changes, shifts in demand for different goods and services are expected

c. Continued inflationary pressure - inflation leads consumers to search for opportunities to save money

3. Socio-Cultural environment - institutions and forces that affects society’s basic values, perceptions, preferences and behavior

Concerns of the Socio-Cultural Environment

a. Views of themselves

b. View of others

c. View of organizationsd. View of society

e. View of nature

f. View of the universe

4. Natural environment - involves natural resources that are needed as inputs by marketers or that are affected by marketing activities

Concerns of the Natural Environment

a. Shortages of raw materials

b. Increased cost of energy

c. Increased pollution

d. Increased government intervention

4. Technological environment - consist of forces that affect new technology, creating new product and market opportunities

Concerns of the Technological Environment

a. Accelerating pace of technological change

b. Unlimited innovational opportunities

c. Increased regulation of technological change

5. Political-Legal environment - made up of laws, government agencies and pressure groups that influence and limit various organizations and individuals in the society

Purpose of Legislation

1. Protect companies from each other

2. Protect consumers from business firms

PART 5

CONDUCTING MARKETING RESEARCH AND

FORECASTING DEMAND

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

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

MARKETING RESEARCH PROCESS

Step 1 Define the Problem, the Decision Alternatives and the Research Objectives

Objectives of a Marketing Research Project

a. Exploratory - the goal is to shed light on the real nature of the problem and to suggest possible solutions or new ideas

b. Descriptive - seeks to describe marketing problems, situations or markets

c. Causal - marketing research to test cause and effect relationships

Step 2 Develop the Research Plan

Data Sources

a. Secondary data - data that were collected for another purpose and already exist somewhere else

b. Primary data - data gathered for a specific purpose or for a specific research project

Research Approaches

a. Observational research - involves gathering primary data by observing relevant people, actions and situations

b. Focus group research - gathering of 6-10 people invited to spend a few hours with a skilled moderator to discuss a product, service, organization or other marketing entity

c. Survey research - the gathering of primary data by asking people questions about their knowledge, attitudes, preferences and buying behavior

d. Behavioral data - customers actual purchases reflect revealed preferences and often are more reliable than statements they offer to market researchers

e. Experimental research - gathering of primary data by selecting matched groups of subjects, giving them different treatments, controlling related factors, and checking for differences in group responses

Research Instruments

a. Questionnaire

Types of Questionnaire

1. Close-ended questions - include all the possible answers, and subjects make choices among them.

2. Open-ended questions - allow respondents to answer in their own words

b. Qualitative measures

Sampling Plan

Decisions Required in Designing a Sample Plan

1. Sampling unit

2. Sampling size

3. Sampling procedure

Types of Samples

a. Probability sample

1. Simple random sample - every member of the population has a known equal chance of selection

2. Stratified random sample - population is divided into mutually exclusive groups and random samples are chosen from each group

3. Cluster sample - population is divided into mutually exclusive groups and the researcher draws a sample of the groups to interview

b. Non-probability sample

1. Convenience sample - the researcher selects the easiest population members from which to obtain information

2. Judgment sample - the researcher finds and interviews a prescribed number of people in each of several categories

Contact Methods

1. Mail Questionnaire - used to collect large amounts of information at a low cost per respondent

2. Telephone Interview - one of the best methods for gathering information quickly and it provides greater flexibility

3. Personal Interview

Individual interview - involves talking with people in their homes or offices, on the street or in shopping malls

Group interview - consists of inviting 6 to 10 people to talk with a trained moderator about a product, service or organization

Online - the collection of primary data through internet surveys and online focus groups

Step 3 Collect the Information

Step 4 Analyze the Information

Step 5 Present the Findings

Step 6 Make the Decision

Market - set of all actual and potential buyers of a market offer

Potential market - the set of consumers who profess a sufficient levels of interest in a market offer

Available market - is the set of consumers who have interest, income and access to a particular offer

Qualified available market - the set of consumers who have interest, income, access and qualifications for the particular market offer

Target market - the part of the qualified available market the company decides to pursue

Penetrated market - the set of consumers who are buying the company’s product

Market demand - 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.

OTHER TERMS TO REMEMBER

Market Forecast - the market demand corresponding to the expected effort.Market potential - is the limit approached by market demand as industry marketing effort goes to infinity for a given environment.

Company demand - the company’s estimated share of market demand at alternative levels of company marketing effort in any given time period

Company sales forecast - the expected level of company sales based on a chosen marketing plan and assumed marketing environment.

Sales quota - is the sales goal set for a product line, company division, or sales representative. It is primarily a managerial device for defining and stimulating sales effort.

Sales budget - is a conservative estimate of the expected volume of sales and used primarily for making current purchasing, production, and cashflow decisions.

Company sales potential - is the limit approached by company demand as company marketing effort increases relative to competitors.

Informational Bases for Building Forecast

1. What people say - involves surveying the opinions of buyers or those close to them

2. What people do - involves putting the product into a market test to assess buyer response

3. What people have done - involves analyzing, records of past buying behavior,

Techniques Used to Forecast Sales

a. Surveys of buyer intentions

b. Composites of sales-force opinions

c. Expert opinion

d. Market-Test method

e. Past-Sales analysis

Basis of Past Sales Analysis

a. Trend - underlying pattern of growth or decline in sales resulting from basic changes in population, capital formation and technology

b. Cycle - medium term wavelike movement of scales resulting from changes in general economic and competitive activity

c. Season - refers to a consistent pattern of sales movements within the year

d. Erratic events - includes fads, strikes, earthquakes, storms/typhoons, fires and other disturbances

Part 6

ANALYZING CONSUMER MARKETS AND BUYER

BEHAVIOR

FACTORS INFLUENCING BUYING BEHAVIOR

1. Cultural factors

a. Culture - the most fundamental determinant of a person’s wants and behaviors

b. Subculture - they provide a more specific identification and socialization for its members

c. Social class - relatively homogenous and enduring divisions in a society that are hierarchically ordered and whose members share similar values, interests and behaviors

Characteristics of Social Class

a. Those within each social class tend to behave more alike than persons from two different social class

b. Persons are perceived as occupying inferior or superior positions according to social class.

c. Social class is indicated by a cluster of variables 2. Social Factors

a. Reference groups - consist of all the groups that have a direct or indirect influence on the person’s attitudes or behavior

Types of Reference Groups

1. Membership groups - groups having a direct influence on a person

2. Aspirational - group which the person hopes to join

3. Dissociative groups - groups whose values and behavior are rejected

b. Family - the most important consumer-buying organization in society

Types of Family in a Buyers Life

1. Family of orientation

2. Family of procreation

c. Roles & Status

Roles - consists of a set of activities that the person is supposed to perform according to the definition and expectations of the individual and the persons around him.

Status - the position or rank of an individual in relation to others, social standing

4. Personal Factors

Components of Personal Factors

a. Age and life cycle

b. Occupation and economic circumstances

c. Life style - the person’s pattern of living in the world as expressed in activities, interests and opinions

d. Personality and Self-concept

Personality - distinguishing psychological characteristics that lead to relatively consistent and enduring responses to environment

Self concept - the totality of the individual’s thoughts and feelings having reference to himself as an object

5. Psychological Factors

Components of Psychological Factors

a. Motivation - the strength of the drive toward an action

Types of Needs

1. Biogenic - needs that arise from physiological states of tension

2. Psychogenic - arise from psychological state of tension

3. Motive - stimulant needed that is sufficiently pressing to direct a person to seek satisfaction of the need

b. Perception

PERCEPTUAL PROCESSES

1. Selective attention - means that marketers have to work especially hard to gain the attention of consumers in the marketplace

2. Selective distortion - the tendency to twist information into personal meanings and interpret information in a way that will fit their preconceptions

3. Selective retention - means that people tend to retain information that supports their attitude and belief

c. Learning - induces changes in our behavior arising from experience

d. Memory

BUYING DECISION PROCESS

1. Problem recognition - the first stage of the buyer decision process, in which the consumer recognizes a problem or need

2. Information search - the stage of the buyer decision process, in which the consumer is aroused to search for more information

3. Evaluation of alternatives - the stage of the buyer decision process, in which the consumer uses information to evaluate alternative brands in the choice set.

4. Purchase decision - the buyer’s decision about which brand to purchase

5. Post-purchase behavior - the stage of the buyer decision process, in which consumers take further action after purchase, based on their satisfaction or dissatisfaction.

Part 7

ANALYZING BUSINESS MARKETS

Organizational buying - the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate and choose among alternative brands and suppliers

TYPES OF BUYING SITUATION

1. Straight rebuy - buying situation in which the purchasing department reorders on a routine basis

2. Modified rebuy - situation in which the buyer wants to modify product specifications, prices, delivery requirements and other terms

3. New task - buying situation which focuses on buying a product or service for the first time

ROLES IN THE PURCHASE DECISION PROCESS

1. Initiators - those who request that something be purchased

2. Users - the members of the organization who will use the product or service.

3. Influencers - members of the organization who directly or indirectly influence the buying decision.

4. Deciders - organizational members who have either formal or informal power to select the final supplier.

5. Approvers - people who authorize the proposed action of deciders or buyers

6. Buyers - people with formal authority for selecting the supplier and arranging the terms of purchase.

7. Gatekeepers - people who have the power to control the flow of information from reaching members of the buying center.

BUSINESS BUYERS MAIN INFLUENCES

1. Environmental factors

2. Organizational factors

3. Interpersonal factors

4. Individual factors

5. Cultural factors

STAGES OF THE INDUSTRIAL BUYING PROCESS

1. Problem recognition - the first stage of the business buying process in which someone in the company recognizes a problem or need that can be met by acquiring a good or service.

2. General need description and product specification - stage in which the company describes the general characteristics and quantity of a needed item and specifies the best technical product characteristics for it

4. Supplier search - stage in which the buyer tries to find the best vendor

5. Proposal solicitation - stage in which the buyer invites qualified suppliers to submit proposals

6. Supplier selection - stage in which the buyer reviews proposals and select a supplier or suppliers

7. Order routine specifications - stage in which the buyer writes the final order with the chosen supplier, listing the technical specifications, quality needed, expected time of delivery, return policies and warranties.

8. Performance review - stage in which the buyer rates its satisfaction with suppliers, deciding whether to continue, modify or drop them

Institutional market - schools, hospitals, nursing homes, prisons and other institutions that provide goods and services to people in their care

Governmental market - government units, local and national that purchase or rent goods and services for carrying out the main functions of the government

Part 8

IDENTIFYING MARKET SEGMENTS AND TARGETS

Market Segmentation - consist of a group of customers who share similar set of needs and wants

BASES FOR SEGMENTING CONSUMER MARKETS

1. Geographic segmentation - the market is divided into different locations-- nations, states, counties, cities, or neighborhoods.

2. Demographic segmentation - the market is subdivided into different parts on the basis of demographic variables-- age, sex, family size, income, occupation, education, family life cycle, religion, nationality.

3. Psychographic segmentation - buyers are divided into different groups on the basis of lifestyle or personality differences.

4. Behavioral segmentation - buyers are divided into different groups on the basis of their knowledge, attitude, use, or response to the actual product or its attributes.

Behavioral Variables

a. Occasion

b. Benefits

c. User status

d. Usage rate

e. Loyalty status

Groups Based on Brand Loyalty Status

1. Hard core-loyals - consumers who buy only one brand all the time

2. Split loyals - consumers who are loyal to two or three brands

3. Shifting loyals - consumers who shift loyalty from one brand to another

4. Switchers - consumers who show no loyalty to any brand

f. Buyer readiness stage

g. Marketing factors

CRITERIA FOR EFFECTIVE SEGMENTATION

1. Measurable - the degree to which the size and purchasing power of the resulting segments can be measured.

2. Accessible - the degree to which the resulting segments can be effectively reached and served.

3. Substantial - the degree to which the resulting segments are large and/or profitable enough to be worth considering for separate marketing attention.

BENEFITS OF SEGMENTATION

1. Sellers are in a better position to spot and compare market opportunities.

2. Sellers can make finer adjustments of their product and marketing appeals.

3. Sellers can develop marketing programs and budgets based on a clearer idea of the response characteristics of specific market segments.

STRATEGIES FOR TARGET MARKETING

1. Undifferentiated marketing - it is when the firm might decide to go after the largest part of the market with one offer and marketing mix thereby trying to attract as many customers as possible

2. Concentrated marketing - it is when the firm might decide to go after a narrow market segment and develop the ideal offer and marketing mix

3. Differentiated marketing - it is when the firm might decide to go after several market segments, developing an effective offer and marketing mix for each