Marketing Management

Prepared by : Soft Skills Unit

Reference

Course Outlines

Lecture 1 : Marketing Principles

Lecture 2 : Market Segmentation and Target

Markets

Lecture 3 : Consumer Buying Behavior and

Decision Making

Lecture 4 : Marketing plan

Lecture 1 - Contents

A. Definitions

B. Concepts

C. Difference Between Marketing & Selling

D. The Marketing Environment

E. The Marketing Mix – 4Ps

F. The Marketing Analysis

Marketing PrinciplesA. Definitions

- Marketing deals with identifying & meeting human & social needs.

- Marketing is a societal process by which individuals and groups

obtain what they need through creating , offering and freely

exchanging products and services of value with others.

- Marketing is the process by which companies create value for

customers and build strong customer relationships in order to

capture value from customers in return.

B. Concepts

1. Customer Needs, Wants and Demands

2. Exchange and Transactions

3. Markets

B .1. Customer Needs, Wants and Demands

Needs: They are states of felt deprivation, They include basic physical needs for food, clothing, warmth and safety

Wants: They are the form human needs take as they are shaped by culture and individual personality.

Ex: An American needs food but wants a Big Mac, French fries,

and a soft drinkDemands: Human wants that are backed by buying power.

B .2. Exchange

Exchange : The act of obtaining a desired object from someone by offering something in return. • It is the core concept of marketing.• Exchange is a value creating process because it normally leaves

both parties

better off.

The Market word has many definitions :• A market is a place where buyers and sellers

meet, good and services are offered for sale and transfers for ownership occurs.

• A market is the set of actual and potential buyers of a product or service.

B. 3. Markets

B. 3. Markets

A Modern Marketing System

• The Selling concept takes an inside-out perspective.

• It starts with the factory.• It focuses on the company’s existing

products.• It calls for heavy selling and promotion to

obtain profitable sales. • It focuses primarily on customer conquest—

getting short-term sales with little concern about who buys or why.

C. Difference between Marketing & Selling

C. Difference between Marketing & Selling

• The Marketing concept starts with a well-defined market.

• It focuses on customer needs• It integrates all the marketing activities that

affect customers.• It yields profits by creating lasting relationships

with the right customers based on customer value and satisfaction

3M:• A $30 billion diversified technology company• “Our goal is to lead customers where they want to go before

they know where they want to go.”• 3M Innovations

C. Difference between Marketing & Selling

D. The Marketing Environment

- The Marketing Environment is the actors and forces outside marketing

that affect marketing management ability to build and maintain

successful relationships with target customers.

- It is made up of microenvironment and macroenvironment.

- The microenvironment consists of the actors close to the company that

affect its ability to serve its customers.

- The macroenvironment consists of the larger societal forces that affect

the microenvironment

Microenvironment

Actors in the Microenvironment

1- The Company: Marketers must work in harmony with other company departments to create customer value and relationships.

• Walmart’s marketers can’t promise us low prices unless its operations department delivers low costs.

2- Suppliers: provide the resources needed by the company to produce its goods and services

• Supply shortages or delays, labor strikes, and other events can cost sales in the short run and damage customer satisfaction in the long run

DENSO Australia Wins Toyota Supplier Of The Year

3- Marketing Intermediaries: They include resellers, physical distribution firms, marketing services agencies, and financial intermediaries

• Resellers are distribution channel firms that help the company find customers or make sales to them. These include wholesalers and retailers who buy and resell merchandise.

• Physical distribution firms help the company stock and move goods from their points of origin to their destinations.

• Marketing services agencies are the marketing research firms, advertising agencies, media firms, and marketing consulting firms that help the company target and promote its products to the right markets.

• Financial intermediaries include banks, credit companies, insurance companies, and other businesses that help finance transactions or insure against the risks associated with the buying and selling of goods.

Microenvironment: Marketing Intermediaries

4- Competitors: The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors do.

5- Publics: it is any group that has an actual or potential interest in or impact on an organization’s ability to achieve its objectives

• Financial publics. This group influences the company’s ability to obtain funds. Banks, investment analysts, and stockholders are the major financial publics.

• Media publics. This group carries news, features, and editorial opinion. It includes newspapers, magazines, television stations, and blogs and other Internet media.

• Government publics. Management must take government developments into account. Marketers must often consult the company’s lawyers on issues of product safety, truth in advertising, and other matters.

• Citizen-action publics. A company’s marketing decisions may be questioned by consumer organizations, environmental groups, minority groups, and others. Its public relations department can help it stay in touch with consumer and citizen groups.

Microenvironment

6- Customers:• 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 use in their production processes.• Reseller markets buy goods and services to resell at a profit. • Government markets consist of government agencies that

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

• International markets consist of these buyers in other countries, including consumers, producers, resellers, and governments.

Microenvironment

Macroenvironment

Major Forces in the Company’s Macroenvironment

Macroenvironment

1- The Demographic Environment: Demography is the study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.Ex: China’s one-child rule created a generation of people who have been pampered by parents and grandparents and have the means to make indulgent purchases.Also, Millennials (Americans born between 1977 and 2000) share an utter fluency and comfort with digital technology.2- The Economic Environment: consists of economic factors that affect consumer purchasing power and spending patterns.• Marketers in all industries are looking for ways to offer today’s

more financially cautious buyers greater value—just the right combination of product quality and good service at a fair price.

3- The Natural Environment: involves the natural resources that are needed as inputs by marketers or that are affected by marketing activities.

• Marketers should be aware of several trends in the natural environment, They are the growing shortages of raw materials, increased pollution and increased government intervention.

• PepsiCo markets hundreds of products that are grown, produced, and consumed worldwide. Making and distributing these products requires water, electricity, and fuel.

• In 2007, the company set as its goal to reduce water consumption by 20 percent, electricity consumption by 20 percent, and fuel consumption by 25 percent per unit of production by 2015.

Macroenvironment

4- The Technological Environment: Forces that create new technologies, creating new product and market opportunities.• Transistors hurt the vacuum-tube industry, CDs hurt phonograph

records, and digital photography hurt the film business. When old industries fought or ignored new technologies, their businesses declined.

5- The Political and Social Environment: Laws, government agencies, and pressure groups that influence and limit various organizations and individuals in a given society.6- The Cultural Environment: Institutions and other forces that affectsociety’s basic values, perceptions, preferences, and behaviors.

Macroenvironment

E. The Marketing Mix

The Four Ps of the Marketing Mix

The set of tactical marketing tools—product, price, place, and promotion—that the firm blends to produce theresponse it wants in the target market.

E.1 ProductProduct is anything that can be offered to a market for attention, acquisition, use, or consumption that might satisfy a want or need.Products also include services.Service: is an activity, benefit, or satisfaction offered for sale that is essentially intangible and does not result in the ownership of anything.

1. Consumer Products: products and services bought by the final consumers for personal consumption

2. Industrial Products: products bought by individuals and organizations for further processing or use in conducting business

E.1 Product

Marketing Considerations for Consumer Products

Product Life-Cycle

Three Levels Of Product

1. Core benefit level; the customers purchase a product because of the functional benefit the product offers.

2. Actual Product level; they take into account how the product’s attributes, features, quality, styling, packaging.

3. Augmented Product level; customers consider the value they receive from a vendor after sales support, warranty, promise of free delivery or installation.

E.2 Place

• Place: refers to how an organization will distribute the product or service they are offering to the end user.

• The organization must distribute the product to the user at the right place at the right time.

• Marketing channel (or distribution channel): it is a set of interdependent organizations that help make a product or service available for use or consumption by the consumer or business user.

• One of the biggest channel developments over the years has been the emergence of vertical marketing systems that provide channel leadership

A conventional distribution channel consists of one or more independent producers, wholesalers, and retailers. Each is a separate business seeking to maximize its own profits, perhaps even at the expense of the system as a whole.A vertical marketing system (VMS) consists of producers, wholesalers, and retailers acting as a unified system. One channel member owns the others, has contracts with them, or wields so much power that they must all cooperate. The VMS can be dominated by the producer, the wholesaler, or the retailer

Comparison of Conventional Distribution Channel with Vertical Marketing System

E.3 Price

Price: It is the amount of money charged for a product or service. • It is agreed upon that the price offered must cover the cost of

the product and return a profit to the producer.

New-Product Pricing Strategies:1- Market-skimming: Setting a high price for a new product to skim

maximum revenues layer by layer from the segments willing to pay the high price; the company makes fewer but more profitable sales.

When Apple first introduced the iPhone, its initial price was as much as $599 per phone.. Six months later, Apple dropped the price to $399 for an 8GB model and $499 for the 16GB model to attract new buyers. Within a year, it dropped prices again to $199 and $299, respectively, and you can now buy an 8GB model for $99. In this way, Apple skimmed the maximum amount of revenue from the various segments of the market.

2- Market Penetration Pricing

Setting a low price for a new product to attract a large number of buyers and a large market share.

The high sales volume results in falling costs, allowing companies to cut their prices even further .

E.4 Promotion Mix

The five major promotion tools are:1- Advertising: Any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor.2- Sales Promotion: Short-term incentives to encourage the purchase or sale of a product or service. 3- Public Relations: Building good relations with the company’s various publics by obtaining favorable publicity, building up a good corporate image, and handling or heading off unfavorable rumors, stories, and events.4- Personal Selling: Personal presentation by the firm’s sales force for the purpose of making sales and building customer relationships.5- Direct Marketing: Direct connections with carefully targeted individual consumers toboth obtain an immediate response and cultivate lasting customer relationships.

It is the specific blend of promotion tools that the company uses to persuasively communicate customer value and build customer relationships.

1. Advertising• There are many advertising 'media' such as newspapers,

magazines and journals, television, cinema, outdoor advertising (such as posters, bus sides).

• To create a good ad, the marketer must create a message that is distinct, meaningful and credible.

• Can reach masses of geographically dispersed buyers at a low cost per exposure

• It enables the seller to repeat a message many times• large-scale advertising says something positive about the seller’s size,

popularity, and success.• Consumers tend to view advertised products as more legitimate• It allows the company to dramatize its products through the artful use of

visuals, print, sound, and color• Advertising can trigger quick sales• Advertising can carry on only a one-way communication with an

audience• Audience does not feel that it has to pay attention or respond• TV advertising, require very large budgets

Sample of Good ADs

Sample of Bad ADs

Video Clips Ads

McDonalds

Vodafone

2. Sales Promotion

Short term incentive to encourage customers to make a

purchase.

• There are many sales promotion types as :

a. Advertising Specialties: A product imprinted with a logo

as mugs, T shirts..etc

b. Cash Rebates: A partial refund to the buyer

c. Discounting : Reducing the listed price for a limited

period of time

d. Coupons

e. Samples

Advertising says “Buy our product”, Sales promotion says

“Buy it now”

3. Public Relations• Used to obtain favorable publicity, building good corporate image

and handling unfavorable rumors, stories and events

• The message gets to buyers as “news” rather than as a sales-directed communication

• Influence the public beliefs, feelings and opinions about the company .

• Mass promotion tool & cheap

• There are several types of public relations :

a. Written material: as brochures, magazine articles..etc

b. Special Events: as presentations, conferences

c. Public Service Activities: as donating money, volunteers or

resources to activities designed to a social cause

d. Speeches: as giving talks

4. Personal Selling

• Personal presentation by the firm’s sales force for the purpose of making sales & building customer relations

• The sales message can be customized to meet the needs of the customer.

• Involves 2 way personal communication

• The buyer usually feels a greater need to listen and respond, even if the response is a polite “No thank-you.”

• A sales force requires a longer-term commitment than does advertising

• Direct marketing is a type of advertising campaign that seeks to elicit

an action (such as an order, a visit to a store or Web site, or a request

for further information) from a selected group of consumers in response

to a communication from the marketer.

• Types of direct marketing:

• Direct Mail

• Telemarketing

• Email Marketing

• Catalogs

• Websites

5. Direct Marketing

In this age of customer value and relationships, the four sellers’ 4 Ps might be better described as the customers’ four Cs

4 Ps 4 CsProduct

Price

Place

Promotion

Customer Solution

Customer Cost

Convenience

Communication

4 Ps Versus 4Cs

• Marketers see themselves as selling products; customers see themselves as buying value or solution to their problems.

• Customers are interested more than just a price, they are interested in the total costs of obtaining, using and disposing of a product.

• Customers want the product and services to be conveniently available as possible.

• Finally, they want a 2 way communication

F. The Marketing Analysis

What is Organization’s SWOT ?

• It is a marketing analysis tool that involves monitoring the external and internal

marketing environment.

• Internal environment (strengths / weakness) analysis:

o A strength is something a firm does well or a characteristic that

enhances its competitiveness.

o A weakness is something a firm lacks, does poorly, or a condition placing it at a disadvantage

Strength can be …

• Valuable competencies or know-how

• Valuable physical assets

• Valuable human assets

• Valuable organizational assets

• Valuable intangible assets- e.g. “Image”

• Important competitive capabilities

• An attribute that places an organization in a position of

competitive advantage

• Alliances with capable partners

Weakness can be …

• Deficiencies in know-how or expertise or

competencies

• Lack of important physical, organizational, or

intangible assets

• Missing capabilities in key areas

• High unit cost

• Poor relationship with employees / suppliers

• External environment (opportunities / Threats) analysis:

o An opportunity is a factor that the company may be able to

exploit to its advantage.

o An environmental Threat current and emerging external

factors that may challenge the company’s performance.

Sources of a marketing opportunity…

• Diversify your business interests

• Is to supply an existing product or service in a new or superior way.

• A new product.

• Changes in use of technology opening up opportunities for your business to utilize these technologies such as E-commerce or Internet sales

Examples of threats…

• Changing customer tastes

• Technological advances

• Tax increase

• Change in governmental policies

• Closing of geographic markets

Build on your

Strengths

Evaluate your

Opportunities

Research your

Threats

Recognize your

Weakness

Sonic’s Strengths, Weaknesses, Opportunities, and Threats

Example:

Tools for Strategy Formulation

• SO Strategies: Use strengths to take advantage of

Opportunities

• WO Strategies: Overcome weaknesses to take advantage of

Opportunities

• ST Strategies: Use Strengths to avoid Threats

• WT Strategies: Minimize Weaknesses and avoid Threats