Marketing management Module 1
- 1. Marketing Management By: Dr Tarek Waheed MBA holder (AUC) Marketing &Training Manager Medicina International
- 2. Marketing Management • Aims: To understand the key factors of Marketing Management • Objective: To Learn the meaning, importance, and concepts of Marketing Management To Learn the nature and importance & Characteristics of Service marketing 2
- 3. Marketing Management • After going through this session, you will be able to: Understand Marketing Management Concepts & Importance of Marketing Management Understand Nature & Importance of Service Marketing Understand Characteristics of Service Marketing 3
- 4. Definition Of Marketing • The word market is derived form the Latin word “Marcatus” meaning goods or trade or a place where business is conducted. The term marketing is defined as a ‘business activity planned at satisfying to a reasonable extent, consumer or customer needs and wants, generally through an exchange process’. • Marketing has been defined in various ways – the definition that serves our purpose best is as follows • Marketing is a social & managerial process by which individuals & groups obtain what they need & want through creating, offering, & exchanging products of value with others 4
- 5. Business Definition of Marketing • In a narrower business context, marketing involves building profitable, value – laden exchange relationships with customers • Hence, we define marketing as the process by which companies create value for customers & build strong customer relationships in order to capture value from customers in return 5
- 6. Definition of Marketing Management • Philip Kotler - “Marketing is Social & Managerial process by which Individuals & Groups obtain what they Need and Want through Creating, Offering and Exchanging products of the Value other” • Peter Drucker - Marketing is a social 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. For a managerial definition, marketing has often been described as “the art of selling products” • The American Marketing Association (AMA) - Marketing is the process of planning and executing the conception, pricing, promotion, & distribution of ideas, goods, & services to create exchanges that satisfy individual and organizational goals 6
- 7. The Marketing Process Model Create value for customers & build Customer relationship 1-Understand the marketplace & customer needs and wants 2-Design a Customer- driven Marketing Strategy 3-Construct a Marketing Program That delivers Superior value 4-Build profitable Relationships & Create Customer delight 5-Capture value From Customers to Create profits & Customer quality 7
- 8. Evolution of Marketing The foundations of marketing in America were laid in Colonial times, when the settlers traded among themselves & with the Native Americans. Some settlers became retailers, wholesalers, & itinerant peddlers. However, large-scale marketing in the U.S. did not begin to take shape until the Industrial Revolution in the latter part of the 1800s. Since then, marketing has evolved through 3 successive stages of development: as 8
- 9. Three Stages of Marketing Evolution in the United States Market orientation Sales orientation Product orientation 9
- 10. 1-Product – Orientation Stage Manufacturers in the product-orientation stage typically focused on the quality & quantity of output while assuming that customers would seek out & buy reasonably priced, well-made products. In an era when the demand for goods generally exceeded the supply, the primary focus in business was to efficiently produce large quantities of product. Finding customers was viewed as a relatively minor function. 1
- 11. 2-Sales – Orientation Stage The world economic crisis of the late 1920’s (referred to as the Great Depression) changed the perception Finds that the economic problem no longer was how to manufacture efficiently, but rather it was how to sell the resulting output Just offering a quality product was no assurance of success Managers realize to sell their products to consumers having limited resources & numerous options required substantial post production effort The Sales-orientation stage was characterized by a heavy reliance on promotional activity to sell the products the firm wanted to make 1
- 12. 3-Market – Orientation Stage At the end of world war II there was strong pent-up demand for consumer goods created by wartime shortage In an attempt to stimulate sales, firms reverted to the aggressive promotional & sales activities of the sales- orientation era Sellers discovered that the war years had also changed consumers In addition, the war efforts brought many women out of the home & into the work force for the first time In addition the consumers had more choices The technology that was developed during the war made it possible to produce much greater variety of goods At this stage companies identify what customers want & tailor all the activities of the firm to satisfy those needs as efficiently as possible 1
- 13. Marketing Concepts + + Organization’s Performance objectives Customer Orientation Coordinated Marketing activity Components & outcomes of the marketing concept MARKETING CONCEPT Customer Satisfaction Organizational Success
- 14. The Core Concepts of Marketing Needs, wants, & demands Products (goods, Services, Ideas) Value, cost, & satisfaction Exchange & transactions Relationships & networks Markets Marketers & prospects
- 15. Needs, Wants & Demands • Marketing starts with human needs & wants • A human need is a state of deprivation of some basic satisfaction • Wants are desires for specific satisfiers of needs • Demands are wants for specific products that are backed by an ability & willingness to buy them • These distinctions shed light on the frequent criticism that “marketers create needs” or “marketers get people to buy things they don’t want” 1
- 16. Products ((Goods, Services, & Ideas • A product is any thing that can be offered to satisfy a need or want – product can be also called as offering or solution • A product or offering can consist of as many as 3 components: • Physical good(s) • Service(s) • Idea(s)
- 17. Value, Cost & Satisfaction Consumers to choose among the many products that satisfy a given need Example: A customer needs to travel for a work – he could use several products for his need: A bicycle, motor cycle, a car, a taxicab or a bus – these alternatives will constitute his product choice set Assume he would like to satisfy several additional needs in traveling to work; namely needs, safety, ease, & economy. Each product has a different capacity to satisfy his need set. A bicycle is slower, less safe, & requires more effort than a car, but a bicycle is more economical. The customer has to decide to which product will deliver the most total satisfaction Cost plays a secondary role
- 18. Exchange & Transactions • Self-production – hungry people can relieve through hunting, fishing, or fruit gathering • By exchange – hungry people can offer a resource in return for food such as money, a good, or a service • Exchange must be seen as a process rather than as an event. 2 parties are engaged in exchange if they are negotiating and moving toward an agreement. When an agreement is reached, we say that a transaction takes place.
- 19. Relationships & Networks Transaction marketing is part of a larger idea called relationship marketing Relationship marketing is a practice of building long-term, trusting, “win-win” satisfying relations with key parties- customers, suppliers, dealers, distributors – in order to retain their long-term preference & business They accomplish this by promising & delivering high quality, good service, & fair prices to the other parties over time. The ultimate out come of relationship marketing is the building of a unique company asset called a marketing network. A Marketing Network consists of the company & all of its supporting stakeholders: customers, suppliers, employees, distributors, retailers, ad agencies, university scientists, & other with whom it had built mutually profitable business relationships.
- 20. Relationships & Networks Two – party Exchange Map Showing Want Lists of Both Parties .Construction Co (Prospect) Caterpillar (Marketer) Construction Co. Want List 1- High-quality, durable equipment 2. Fair Price 3. On-time delivery of equipment 4. Good parts & service Caterpillar Want List Good price for Equipment On-time payment Good word of mouth
- 21. Markets • A concept of exchange leads to the concept of a market • A market consists of all the potential customers sharing a particular need or want who might be willing and able to engage in exchange to satisfy that need or want • Traditionally, a “Market” was the place where buyers & sellers gathered to exchange their goods. • Marketers, however, see the sellers as constituting the industry and the buyers as constituting the market
- 22. A Simple Marketing System Figure show the relationship between the industry & the market The sellers send goods & services & communications (ads, direct mail) to market; in return they receive money & information (attitudes, sales data) The inner loop shows an exchange of money for goods & services; the outer loop shows an exchange of information. Industry (a collection Of Sellers) Market (a collection of buyers) Goods / services Money Communication Information
- 23. Marketers & Prospects • When one party is more actively seeking an exchange than the other party, we call the first party a marketer & the second party a prospect • A marketer is someone seeking one or more prospects who might engage in an exchange of values. • A prospect is someone whom the marketer identifies as potentially willing & able to engage in an exchange of values
- 24. Features of Concepts • Differing orientations to Business Gives Rise to Different Concepts of Marketing The Exchange Concept The Production Concept The Product Concept The Sales Concept – Diff b/w Marketing & Sales The Marketing Concept – A Shift in orientation From production to marketing From product to customer From supply to demand From sales to satisfaction From internal to external
- 25. Definition of Marketing Concept We are ready to give a definition to the marketing concept The marketing concept is essentially a point of view about business. It enunciates that business is basically a “need-satisfying process” & that business must be managed keeping the consumer & his need as the focus. The concept prescribes that all goals of business, including profit, must be realized through consumer orientation & generation of customer satisfaction
- 26. Definition of a Service Marketing It is difficult to provide one single definition of a service. • Level 1: service is an intangible offering with little or no transfer of physical products to the customer. Ex; car rentals, insurance, education • Level 2: service is a one part of product-service mix being offered to customers. Ex; restaurants. The physical goods are as important as the service part of the offering & customers have to be satisfied with both • Level 3: the main offering is the product but the supplier also provides some service. Ex; car service & installation of equipment • Level 4: every product or service or any combination of a mix of the two ultimately is supposed to provide service for customer. The customer buys a car because it provides him transportation services. This idea is gaining ground as companies are increasingly trying to become customer oriented
- 27. Services • Most above attempted definition are incomprehensible. The concept of service has to be understood either as an exclusive offering from a company that is primarily intangible, or as a part of the service- product mix that a company offers • Services Marketing Includes • Since Services are highly intangible, its benefits are felt over a period of time & not immediately
- 28. Paradigms in services Marketing • Service as a process • In service marketing, since customers are often involved in the production of services, marketers need to understand the nature of the service process & the stages in this process that are exposed to customers • It is important for the service marketers to understand each of the moments of truth involved in the service process because the service brand will be developed only when each of them have been managed in an honest & sincere manner • The experience of service leaders has shown that they tend to bring back office to the front so that the customer is able to know to operations & provide feedback on service design improvement
- 29. Paradigms in services Marketing • Classification of Services • People processing services: a marketer involved in people processing services tries to create a new set of values in the industry for the customers • Product / Possession Processing Services: the customer evaluates the services, on the basis of tangible promises being delivered within a defined time period at a pre-negotiated price • Mental Stimulus Processing: has a impact on consumer mind & have the potential to shape their attitudes, behavior & lifestyle • Information Processing Services: the marketer should understand that information is the most tangible form of service output, mostly vital from the point of customer’s own competitive advantage
- 30. Paradigms in services Marketing • Do it Right the First Time: a bad service delivery not only creates a dissatisfied customer, but also severely impacts the brand equity • Speed! Speed!! Speed!!!: speed holds the key to brand planning in the service industry • Keeping Customer Perspective Always: service marketing cannot succeed without always maintaining the customer’s perspective at all levels of the organization
- 31. Nature of Services • It is important to understand that services are different from products & this difference warrants a change in the way services are marketed • Intangibility: cannot be seen, tasted or touched before they are brought. It is a deed, performance, or effort (eg: Holiday, hospitals) • Inseparability: involve simultaneous Production & Consumption • Presence of other consumers: may take place in the presence of other consumers • Variability: standardization is difficult in provision of services - vary in their skills & attitude & are subject to simultaneous production & consumption • Perishability: it can not be stored for the future & hence its consumption cannot be deferred (eg: No. of hotel rooms in a hotel premise. Should match the supply & demand)
- 32. Characteristics of Service Marketing • Intangibility: the customer decision is completely dependent on is understanding of the service product at a given point of time & his belief in the marketer’s promise of future performance • Low Price Sensitivity: performance & price sensitivity are inversely related • No Inventory: profitability & viability are extremely critical for the service provider is to deliver exemplary service to the customer • Value Creation Process: in service industry is through people, process, proof of performance & the pace at which the service is delivered • Tangibility: is provided to the service product by the service provider, communication & the speed at which the service is delivered. The ambiance of the service product helps in creating an appropriate set of beliefs which will help reassure the customer. • In the context of internet services like call centers
- 33. Characteristics of Service Marketing • Inseparability: services can not be separated from the creator- seller of the service. Eg: Dentists create & dispense almost all their services at the same time, & they require the presence of the consumer for the services to be performed • Heterogeneity: it is difficult of not impossible for a service firm, or even an individual seller of services, to standardize output . Each unit of service is somewhat different from every other unit of the same service • Perishability: the services can not be stored or inventoried for future use.
- 34. Service is growing due to : • Advances in technology that has led to more sophisticated products that require more services • Growth of per capita income has given rise to a greater percentage of income being spent on luxuries such as restaurants, overseas holidays, etc., • A trend towards outsourcing means that manufacturers are buying services that are outside the firm’s core expertise (warehousing, catering) • Deregulation has increased level of competition in certain service industries like telecom • Due to growth in per capita income, people are buying more goods, which has contributed to making retailing an important service Importance of Services Marketing
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