Marketing Management (Module 1)

MBA – 104

Marketing Management

What Marketing is Not These Alone….

Selling

Advertising

Promoting a product

Maximising profits

Maximising market share

Making a customer pay more

What is Marketing?

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

So… Marketing is…

About the customer!

A process…. Not an event

About creating value

Definitely not selling!

More about developing relationships with customer

All this is ultimately supposed to benefit the shareholders of the company.

So… Marketing is…

CreationCommunicationDeliverValueTarget CustomersProfitably

C C D V T P

Marketing… In 3 Words!!

Meeting Needs Profitably!!!

Who is a Marketer?

Response could be….A PurchaseA Repeat purchaseGetting attentionGetting a voteNon use of a productPermission for a trip!.......

Anyone Seeking a Response

Then the Key to Marketing Success is…

Creating “Value”…. Making the customers

aware of it…. And delivering it to them

whenever they seek it…

But… What is Value???

You derive benefits from products

You pay a cost to acquire and use those products and services….. So you pay a cost to obtain the benefits

Value is the your assessment of the relative worth of the benefits from a product as compared to the cost you pay

The sum of the tangible and intangible benefits and costs…

What is Value???

CustomerValue

ExchangeValue

Perceived Use

Value,

Perceived Value

Perceptions of the customer about the attributes and qualities of the product in relation to his or her needs

How well the customer thinks the product will be able to satisfy the specific need he or she is looking to satisfy

So…. Perceived Value is customer’s judgment of a product and therefore subjective in nature

Exchange Value

The amount of money realized at the time exchange of the product takes place

Exchange value refers to the price you have to pay for acquiring a product

So… Exchange value is realized only when the product is sold and is realized by the “seller”

Exchange & Utility

The criteria needed for an exchange to occur:Must have something of value to exchangeNeed to be able to communicateMust be able to exchangeMust want to exchangeAt least 2 people needed for an exchange to occur

There are four types of utility:Form – Production of the good, driven by the marketing function.Place – Make product available where customers will buy the product. Time – Make product available when customers want to buy itPossession – Once you own the product, do what you want with it

What is the Value Chain?

Coordinated series or sequence of

functional activities necessary to transform

inputs into finished goods or services

customers value and want to buy

A Simple Value Chain

The Value Chain (VC) & the Firm

VC allows alignment of processes with customers. This generates a quality advantage.

VC focuses cost management efforts.

VC provides for efficient processes which improves the timeliness of operations.

Value Chain Management

Development of a set of functional-level

strategies that support a company’s

business-level strategy and strengthen its

competitive advantage

Levels of the Value Chain

1. Firm Level• Chain of activities for a firm operating in a specific industry

2. Industry Level• Various processes that are involved in producing goods, starting

with raw materials and ending with the delivered product

3. Global Value Chains• Value chain activities to produce goods or services, spread over

vast geographic distances

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Firm Level Value Chain

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Technological Development


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Human Resource Management


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MARGIN

MARGIN


What Happens When Value is Added?

Cotton Cotton Thread

CottonCloth

CottonShirt

BrandedCottonShirt

What is Customer Satisfaction?

Think of an incident in which you were “surprised and delighted” as a satisfied customer. How did that happen?

Think of another situation where you were very disappointed as a customer, and you did not return or you told others about your negative experience. How did that happen?

Class Discussion

So…. Customer Satisfaction is a function of

the VALUE of the product which is the

consequence of its UTILITY (Use Value) and

EXCHANGE (Exchange Value)

So… Customer Satisfaction is…

What is Marketing Management?

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

The Beginning of the Marketing Era

LL Bean 1912, founded on the marketing concept, in his first circular:

"I do not consider a sale complete until goods are

worn out and the customer still satisfied. We will thank

anyone to return goods that are not perfectly

satisfactory... Above all things we wish to avoid having

a dissatisfied customer."

The Beginning of the Marketing Era

Peter Drucker, in 1954 said:

“If we want to know what business is we must first start with its

purpose...There is only one valid definition of business

purpose: to create a customer. What business thinks it

produces is not of first importance, especially not to the future

of the business or to its success. What the customer thinks he

or she is buying, what he or she considers "value" is decisive.

It determines what a business is, what it produces, and

whether it will prosper”

Where Do We Stand Today???

Social Responsibility Marketing

Relationship Marketing

Value Co-Creation

Integrated Marketing

Holistic Marketing

Internal Marketing

Performance Marketing

Green Marketing

We are still in the marketing age, but our understanding of what marketing means is changing…So… Some new concepts have been incorporated…

Marketing Philosophies / Orientations

The Production Concept

The Product Concept

The Selling Concept

The Marketing Concept

Production Orientation

Assumes that products that are widely and cheaply available will be preferred

Focus is on production efficiency, cost reduction & mass distribution

Was the norm with most companies at beginning of this century

Today, it is the orientation of companies operating in less developed markets or have chosen to serve “price sensitive” markets in developed markets

Product Orientation

The assumption is that the higher quality product or the product with more or better features will be preferred

The focus is on production process, product quality and having an “overall better product than the competitor”

Historically, product orientation came after the production dominated philosophy

Even today companies operating in non competitive markets or servicing non demanding market segments adopt this philosophy

The Selling Orientation

Assumes that customers will not buy unless “made to buy” or “convinced to buy”

Marketing for such an organization would mean aggressive sales and aggressive promotions

Historically was the norm after the product concept

Now it is a norm with companies that either sell “unsought products” or are unable to adjust their marketing programs to ever changing market realities

Marketing Orientation

Assumes that customer and customers’ needs should be the basis of all efforts by the company

Company will value and collect customer intelligence and competitor intelligence too

Products, policies and practices will remain “dynamic” and will change either “reactively” or “proactively”

Necessary feature of companies operating in competitive markets

Marketing Tasks

Environmental Analysis

Formulation of Marketing Strategies

Marketing Planning and Implementation

Strengthening Customer Relationships

Building Strong Brands

Communicating and Delivering Value to Customers

Concepts

Concepts

Needs, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets

NeedState of felt deprivationExample: Need food

WantsThe form of needs as shaped by culture and the individualExample: Want a Big Mac

DemandsWants which are backed by buying power

Core Concepts

Concepts


Core Concepts Marketing offerCombination of products, services, information or experiences that satisfy a need or wantOffer may include services, activities, people, places, information or ideas

Concepts


ValueCustomers form expectations regarding valueMarketers must deliver value to consumers

SatisfactionA satisfied customer will buy again and tell others about their good experience

Core Concepts

Concepts


ExchangeThe act of obtaining a desired object from someone by offering something in returnOne exchange is not the goal, relationships with several exchanges are the goalRelationships are built through delivering value and satisfaction

Core Concepts

Concepts


MarketSet of actual and potential buyers of a productMarketers seek buyers that are profitable

Core Concepts

Marketing Management (Module 1)

Education

Transcript of Marketing Management (Module 1)