Marketing Management

Marketing and Sales

Marketing is identifying the right product and satisfying thecustomer.

Complied by Surabhi Singh

Marketing- Definitions

•Marketing is identification of product and satisfying thecustomer.

•Marketing is defined as a social and managerial process bywhich individuals and groups obtain what they want throughcreating and exchanging product and value with others.(Kotler)

•Marketing is an organizing set of processes for creating,•Marketing is an organizing set of processes for creating,communicating and delivering value to customers and formanaging customer relationship that benefit organization and itsstakeholders.(American Marketing Association)


Evolution of Marketing-Historical Perspectives

Production Era17th Century Sales Era

1920-1950

Marketing Era1950 onwards

Production Era- Produce as much as possible.Production Era- Produce as much as possible.Manufacture product, sells product and maximizes profit thruincreased production

Sales Era- Convince customers to buy what marketers have.Manufacture product, sells product thru aggressive selling andmaximize profit thru sales revenue.

Marketing Era- Give customers what they wantManufacture product, market products and maximizes profit thrucustomer satisfaction.


Scope of Marketing

Scope of Marketing

Services

Goods

Places

Information

Goods

PersonsEvents

Experiences

Properties

Idea Organization


èWhat is Marketed ?……

Goods: Physical goods – Vehicles, TV, refrigerators, tyre etc

Services: Banking, airlines, maintenance workshops, beauty parlors

Events: Trade shows, sporting events

Experiences: Amusement / water parksExperiences: Amusement / water parks

Persons: Celebrity marketing

Places: Tourist destinations

Organizations: Companies, educational institutions

5Complied by Surabhi Singh

è ‘Marketers’ and ‘Prospects’

• A marketer is someone who seeks a response( attention,

a purchase)from another party called a prospect.

• Marketers seek to influence the level, timing and • Marketers seek to influence the level, timing and

composition of demand.

Prospect: A company / person that you know will require your services and they

are looking to purchase.

Suspect: A company / person that you know will require your services but

nothing else is known6Complied by Surabhi Singh

Objectives of Marketing

•Creating Demand for the products by identifying theneed and wants of customers

•Increasing the market share of organization

•Building the goodwill of the organization

•Increasing profits and achieving long term goalsthrough customer satisfaction


Organizations

People or

Organizations

Marketers to consider THREE specific factors:Marketers to consider THREE specific factors:

People and organizations with needs

Purchasing power

Needsto Satisfy

Market

What is a market?

Purchasing power

Buying behavior

MoneytoSpend

WillingnesstoSpend


FactoryExisting Products

Selling and

promoting

Profit through sales volume

Start Focus Means Ends

Inside Out- Selling Concept

MarketCustomer Needs

Integrated Marketing

Profits through customer satisfaction

Outside in- Marketing Concept


Marketing Terms

Needs, wants and demands

Markets Marketing offers (products,

Exchanges, transactions

and relationships Value and

satisfaction

(products, services and experiences


è Need – Basic human requirement. Food, clothing, shelter , Transport

è Wants – Need becomes Wants when directed to specific objects that satisfy

needs – Mc Donald Burger is a want, Maruti car etc

è Demand – are wants for specific products along with ability to pay – a Rolex

watch, a BMW car etc.

è Desire – Having dinner in a five star hotel

è Value – Perceived tangible and intangible benefits and cost to a customer

è Satisfaction – Reflects a person’s comparative judgment in relation to his /

her expectations


• Negative Demand- The demand for air travel becomes negative when theticket prices increases.

• Non existent Demand- Demand of non burglar alarm is of non existence inareas which are prone to criminal activities.

• Latent Demand- A demand for a product which is not satisfied by anexisting product. E.g- Demand for a low calorie ice cream is a latentdemand.

• Declining Demand- Refers to decreasing demand of a product. For EgChanging the ad of a product to attract customers.

Different Type of Demand

Changing the ad of a product to attract customers.• Irregular demand- Demand that varies according to seasons or festive

occasions. E.g- During diwali the demand for chocolate increases- kuchmeetha ho jaaye, pappu pass ho gaya

• Full Demand- Refers to a situation when the demand for a product equatessupply.

• Overfull Demand- Implies a situation where a demand for a productexceeds supply.

• Unwholesome Demand- Implies demand for a product that hasundesirable social consequences. Eg Destroying the demand of cigarrettesby writing messages on the packet.Complied by Surabhi Singh

MARKETING CONCEPTS• Production Concept- Manufacture, sell and

maximize profit thru production.• Product Concept• Selling Concept- Manufacture, sell and• Selling Concept- Manufacture, sell and

maximize profit thru sales revenue.• Marketing Concept- Manufacture, sell and

maximize profit thru customer satisfaction.• Customer Concept• Societal Marketing Concept


Societal MarketingSociety

Human Welfare, environment

Consumers Company(Needs, Wants, Satisfaction) (sales volume, profits, growth)

E.g CSC Complied by Surabhi Singh

èWhat is meant by ‘Product’ ……

Anything that can be offered to a market that might satisfy a want or need

• In Retailing products are called merchandise

• In Manufacturing products are purchased as raw materials.

• In Insurance business, products are insurance policies

A brand is when the product is from a known source


Anyone who is in the market looking at a product /

service for attention, acquisition, use or consumption

CUSTOMER IS . . . . .

Who is a Customer ??

service for attention, acquisition, use or consumption

that satisfies a want or a need


Value –

The benefits the customers gain from using the product versus the cost of obtaining the product.

Satisfaction –

Based on a comparison of performance and expectations.expectations.

– Performance > Expectations => Satisfaction

– Performance < Expectations => Dissatisfaction

17

E.G Loss of market share of Nokia over Samsung and Apple


• CUSTOMER has needs, wants, demands and desires

• Understanding these needs…… is starting point of the entire marketing

• These needs, wants …… arise within a framework or an ecosystemecosystem

• Understanding both the needs…… and the ecosystem is the starting point of a long term relationship

18

E.G Walmart , world’s largest retailer has reported profit under theleadership of CEO Doug McMillon in a recent quarter in 2012. Thestrategy used is cut cost and use price advantage on food items.


Marketing management is the conscious effort to achievedesired exchange outcomes with target markets. Themarketer's basic skill lies in influencing the level, timing, andcomposition of demand for a product, service, organization, place,person, idea or some form of information. There are severalfactors that participated role to evolution of marketing like:

1. Changes in Consumer Behavior2. End of the mass market2. End of the mass market3. Marketing Management Philosophies Production

conceptProduct

Marketing Selling

Societal Marketing4. Evolving Views of Marketing role


Opening a book shop on Campus

1. Is there a need? (Of having book shop)

2. What is my target market? (Who will be buying products from yourbook shop)

3. What is my product?(Basic items to be sold)

4. How can I produce and deliver a “product” better than mycompetitors?

5. How shall I promote my product?

6. How can I insure customer loyalty?


•Marketing Management is the art and science of choosing targetmarket and getting, keeping and growing customers throughcreating, delivering and communicating customer value.

•Marketing management is a broad scope of the study of marketingfocusing on the practical application of the techniques andmarketing activities of a certain company or business.

•This business discipline encompasses marketing planning andstrategy, orientations, and processes needed in attaining company

Marketing Management

strategy, orientations, and processes needed in attaining companygoals by providing value to clients.

•Since it has a wide coverage involving all factors required tosatisfy customers, marketing management must be all-pervasiveand part of every employee’s scope of work, from the subordinatesto those in the higher management.•E.g- Lenovo, Chinese PC maker has cornered the largestshare in Indian PC market overtaking DELL and HP in March,2012.


Marketing Management Process• Analysis/Audit - where are we now?

• Objectives - where do we want to be?

• Strategies - which way is best?• Strategies - which way is best?

• Tactics - how do we get there?

• Implementation - Getting there!

• Control - Ensuring arrivalComplied by Surabhi Singh

Strategy & TacticsPeter Drucker says: "Strategy is doing the right things, tactics is

doing things right.“• Strategy is ‘perspective’. that is, your vision and direction or ‘Future Picture

and Direction’. Strategy involves the "big picture" - the overall plan, and how those plans will achieve your goals and objectives

• Strategy is the set of directions you make to enhance your situation and • Strategy is the set of directions you make to enhance your situation and position within your overall market.

• Tactics are the day-to-day activities that are repeatable in your business and relatively clear-cut.

• Tactics are the actual ways in which the strategies are executed. They may also include such things as newsletters, press releases,advertising, websites etc

•Complied by Surabhi Singh

Elements of Marketing Strategy - example

Segmentation and Target Market – ‘Well to do urbanites’ in India, the fashion conscious with a taste for good things in life.

Product Strategy – Premium product bases on modern technology – cover all four major segments of the business: saris, suiting, shirting and dress materials

Distribution Strategy -- Through showroom or ‘exclusive retail outlets’ – VIMAL Distribution Strategy -- Through showroom or ‘exclusive retail outlets’ – VIMAL SHOWROOMS leading to jumbo ‘VIMAL PRESTIGE SHOWROOMS’

Pricing Strategy – Value Pricing ( The company wanted high volumes ). Vimal fabrics to be seen by customers as good value for money.

Promotion Strategy – ONLY Vimal concept – focus on technology, R&D. Promote through exclusive fashion shows.


Philip Kotler says, “MarketingManagement is the art and science ofchoosing target markets and buildingprofitable relationship with them.profitable relationship with them.


INNOVATIONS IN MODERN MARKETING•De marketing- Kotler and Levy have coined the conceptdemarketing a situation which may come as a result of temporaryshortages occassioned by short term excess demand for acompany’s products.

•Re marketing- Takes the form of finding certain new uses of usersfor an existing product.

•Over marketing- Constitutes the striving by a firm to generateincreased sales while neglecting quality control, production efficiencyincreased sales while neglecting quality control, production efficiencyand cash flow management. E.g Auto Industry- Since the advent ofJapanese imported cars, American auto companies escalatedadvertisements to protect themselves from foreign competition.

•Meta marketing- Eugene J Kelly developed this concept by sayingthat meta marketing is the synthesis of all managerial, traditional,scientific, social and historical foundations of marketing .The concept is developed as the marketing appears to be movingtowards broader horizon.


Market Insight

Focus Strategic Content

Innovation


Customer ValueCustomer value is the difference between the values the customer gains fromowning and using a product and the cost of obtaining the product. On theother hand we may understand that the total customer value is the total sumof product value, services value, personnel value and image value. Besidesthese monetary, time, physic and energy costs are the total costs of a customer.Should the customer value be expressed as a formula:

Total Customer value = Product value + services value + personnel value +image value Total customer cost = Monetary cost + time cost + physic cost +image value Total customer cost = Monetary cost + time cost + physic cost +energy cost Customer Delivered value = Total Customer value – Total customercostCustomer value is the difference between total customer value and totalcustomer cost. Put it very simply, customer value is created when theperceptions of benefits received from a transaction exceed the costs ofownership. The same idea can be expressed as a ratio(Chiristopher,1996):

Customer value = Perceptions of benefitsComplied by Surabhi Singh

•Marketing is the art of attracting and keeping customers.

•Losing profitable customers can affect firm’s profit.

•Maximizing customer value means cultivating customer relationship.

•CRM is the process of managing the customer information andcarefully managing all touch points to maximize customer satisfaction.

Creating and Developing customer Value

•Touch points are an essential component which needs considerableattention

•For hotels the touch points are room service, check in and out, exercisefacilities.

•CRM consists of four steps-1. Identify prospects2. Differentiate customers in terms of customer needs.3. Interact with individual customer4. Customize products or services


Creating and Developing customer Value

•A recent collaboration between RIL and British Petroleum in 2012has increased the percentage of FDI in India

•Hero MotoCorp has outrun Bajaj Auto in two wheeler . It has 45.17%(2011-2012) share in market, Bajaj has 19.1 % share, TVS has 14.11%,Suzuki Motorcycle has 2.52% , HMSI has 14.86% and Others have1.59% share

•Karizma (Hero MotoCorp in premium segment), Pulsar(Bajaj Auto inpremium segment). Discover, sports bike by Bajaj

•Bajaj Moved out of scooter segment in 2009.

WHAT IS THE REASON???????

HERO – BAJAJ CASE STUDY


Requisites for Creating Value

•Companies should make an effort to know the total customer experience.

•Adding features to a product improves customer experience. Lexusengineers add features and services designed to enhance the customerexperience and paying attention to a target price that deliver value tocustomer.

•Pay attentions to target price

•Must understand customer satisfaction index.


Methods of developing customer value

1..Emphatic Design- An effective way to developimproved recognition of customer desires and needs.For this reason Honda’s effort to improve customerexperience includes observation of customer’s actualexperience.

•For instance videotaping consumer product use is oneform of the emphatic design. Emphatic design gives abusiness the opportunity to learn more about thecustomer’s usage experience.

•It is an observational approach to understandingcustomer needs and discovering the problemscustomers commonly encounter in acquiring.


Total Customer Experience

Purchase Experiences Usage Experiences

Replacement Experience

Information gatheringPrioritizing needs

Delivery &InstallationProduct Usage

Product UpgradesReturns and Prioritizing needs

Evaluating needsOrder placement and payment

Product UsageProduct MaintenanceProduct Repair

Returns and WarrantyProduct ReplacementProduct Disposal


2.. Hypothetical Videos: Current versus Desired customer experience

•Observing customers in most business is notpossible, hence a business can create twohypothetical videos of the customer experience. VideoI would be scripted sequence of scenes that describe atypical customer experiences with respect toacquisition, installation, use ,maintenance and disposalacquisition, installation, use ,maintenance and disposalof the product. This video will be made fromcustomer’s perspective.•Video I is not product specific. Video II wouldredescribe the scenes of Video I and it provides theopportunity for a business to discover new ways toimprove and communicate customer value.


•3. By the customer experience of lead users provides theinsight tocompanies for improving a product by adding new features ormodifying it in other ways.

•4. Transforming a bad experience into customer Value

•5. Managing Customer Touch Points- Honda and 3M makeefforts to create additional benefit beyond product benefits. Forinstance at product planning touch point if customer is not ableinstance at product planning touch point if customer is not ableto recognize the business solution, at product delivery touchpoint product delivered late or damaged etc.

•6. Reverse Innovation- Invent to order- Reverse innovationstarts by listening to the customer experience and identifyingproduct benefits not provided by existing products. The firstLexus car went through 1000 design changes based oncustomer input. Complied by Surabhi Singh

7. Value Chain-

Michael Porter proposed the value chain as a tool for identifyingways to create more customer value. The value chain identifies ninestrategically relevant activities that create value and cost in aspecific business.


8. Mass Collaboration- B D Tapscott laid out this concept.With mass collaboration a business outsources its researchand development effort to people all over the globe any oneof whom could make the discovery, find the solution, orpropose the idea the business is looking for. Masscollaboration gives the business a new approach to valuecreation.

P&G uses mass collaboration to develop improved products.P&G uses mass collaboration to develop improved products.The company uses mass customization offering a cashaward to the first scientist anywhere in the world whoproduces and effective and safe molecule.

The four groups involved in mass collaboration areprosumers, partnerships with professionals, suppliers,employees.


Prosumers

PartnersMass Collaboration

•Meaningful Benefit•Cost feasible margins•Fits product

Suppliers

Employees

•Fits product platform and strategy


Examples of Customer Value

•Dhara cooking oil and Frooti the mango drink were launched in tetra packsgiving advantage to the products.

•Reid & Taylor with the choice of Amitabh Bachchan as brand ambassadorgives better recall.

•Maruti Suzuki India Limited started producing maruti 800 in collaboration•Maruti Suzuki India Limited started producing maruti 800 in collaborationwith Suzuki Motor from 1983. It penetrated the metro, and other class Itowns thru twin advantages of fuel efficiency and affordability. Itsubsequently revolutionized the automobile scene in India by entering classII and III towns continuously adding new products in the automotive categorysuch as Gypsy, Omni, Bolero, Zen. It has diversified into automotiveinsurance, buying and selling second hand cars thru maruti true value andother initiatives.


Total Customer Value

Total customer value is the perceived monetary value ofthe bundle or economic, functional, and psychologicalbenefits customers expect from a given market offering.


•Suppose the buyer for a large construction company wantsto buy a tractor from Caterpillar or Komatsu.

• The competing salespeople carefully describe theirrespective offers.

•The buyer wants to use the tractor in residentialconstruction work.

• He would like the tractor to deliver certain levels ofreliability, durability, performance, and resolve value.

• He evaluates the tractors and decides that Caterpillar hasa higher product value based on perceived reliability,durability, performance, and resale value


•He also perceives differences in the accompanyingservices – delivery, training, and maintenance – anddecides that Caterpillar provides better service andmore knowledgeable and responsive personnel.

• Finally, he places higher value on Caterpillar’scorporate image.

• He adds up all the values from these four sources –product, services, personnel, and image – andperceives Caterpillar as delivering greater customervalue.


Characteristics of Customer Value

• Choosing feature which consumer value the most.

•Ranking of each feature•Ranking of each feature

•Compare features with a competitor.

•Monitor features vs. customer value over time.


Classification of Customer Value

• Functional

•Social

•Emotional

•Epistemic

•Conditional


Marketing of Customer Value

•Value Selection consists of Marketing planning, buyeranalysis, market segmentation and targeting.

•Value Delivery consists of Product development,manufacturing, service planning, manufacturing,pricing, distribution and servicing.pricing, distribution and servicing.

•Making a value proposition

•Communicating the value proposition

•Value Enhancement


Value Delivery : Examples

Standard Chartered Bank- It offers a global credit cardto all its card holders while other banks have onlycountry specific cards.

Godrej GE – This joint venture has encouraged existingGodrej GE – This joint venture has encouraged existingcustomers to give feedback on how add value tocompany’s products.

Customer Value: P&G Pringles Case Discussion


Customer DelightThe very favorable experience of the client of a business when they havereceived a good or service that significantly surpasses what they hadinitially anticipated.



Customer Satisfaction

Person’s feelings of pleasure or disappointment resultingfrom comparing a product’s perceived performance inrelation to his or her expectation.

Xerox for example guarantees total satisfaction and willreplace at its expense any dissatisfied customer’sreplace at its expense any dissatisfied customer’sequipmentfor a period of three years after purchase

DELL was the first in the industry to offer manufacturerdirect technical support.


Monitoring and Managing Customer Satisfaction

•The marketing task is to find ways to enhance customer value by improvingthe perceived benefits and/or reducing the total costs of ownership.

•Both the numerator and the denominator of this ratio should be measuredrelative to competitive offers. Total cost of ownership rather than price is usedhere because in most transactions there will be costs other than priceinvolved.

•For example, inventory carrying costs, maintenance costs, running costs,•For example, inventory carrying costs, maintenance costs, running costs,disposal costs and so on. In business-to-business markets, as purchasersbecome increasingly sophisticated, the total cost of ownership can be acritical element in the purchase decision (Ellram,1993). Life cycle costs, asthey are referred to in the banking and industries, have long been a criticalissue in procurement decisions in those markets.

•Companies have to understand their customers, to know where theirbusiness sector is going as well as to anticipate what systems theircustomers will need in order to remain at the very forefront of competition,often to work with them both on future planning and on rapid implementation.Complied by Surabhi Singh

Methods for monitoring and managing customer satisfaction

•Complaint and suggestion systems

•Customer Satisfaction surveys

•Ghost Shopping- Companies can hire persons to poseas potential buyers to report their strong and weakas potential buyers to report their strong and weakpoints.

•Lost customer analysis- Companies should contactcustomers who have stopped buying or switched toanother supplier. When IBM loses a customer, itmounts thorough effort to learn where it failed.


The experience of customer and the experience ofthe environment create the value change. Valuechange is a developing process, which can beaccelerated by;

! Technological changes! Technological changes

! Conflict between existing values

! Dramatic events

! Uncovering of the other culture’s valuesComplied by Surabhi Singh

Turnover of Consumer Durable Player in 2012

Samsung- 200 Billion

LG – 162 Billion

Sony- 63.13 Billion

Hitachi- 54 Billion

Voltas- 45.57 Billion

Whirlpool- 31.35 Billion

Haier- 9.72 Billion


•Rise in profit of ITC shows its robustness of corporatestrategy.

•Toyota world’s second largest car maker is trying toexpand its market.

•Airtel, being the largest integrated telecom company inIndia have shown growth in this year 2012.

Current Market News-2012

•IBM, Cadbury, Tesco are examples of corporate brandnames. Nesafe, Dulux, Castrol and intel are examples ofproduct brand names.

•TATA DOCOMO came with per second pricing strategythat really made them popular.
