1. Marketing Management After carefully studying this chapter, you should

be able to:

Define marketing; Explain the marketing concept; Describe how marketing is organised; Explain how to monitor environment.

Preface Marketing is based on a concept – which is an

idea, a basis, a focus.

Marketing: exchange value for value

Why do organisations need marketing?

1.1 Marketing defined Marketing is the management process responsible

for identifying, anticipating and satisfying customer requirements profitably.

Source: The British Chartered Institute of Marketing

1.1.1 Profit Profit: revenue is larger than costs

Loss: costs are higher than revenue

Other benefits: some organisations get their funds without selling Charities Schools

1.1.2 Exchange Both parties feel happy with a fair exchange. Examples of exchanges:

A exchange this for this Housewife $1.5 Fresh fruit for the family Greengrocer Fresh fruit Profit of 30cents Small boy Washing dad’s car Meal in Burger King Father $3.0 (for meal) Clean car without any effort Disabled person Gratitude Help Helper Time Feel-good factor

1.1.3 Alternative concepts Different people/departments in an organisation

might have different thinking.

Not everyone is concerned about marketing.

There are other concepts that exist in an organisation.

Production The production concept is based on the ability of an

organisation to make certain products, or to supply certain services.

Usually a production concept lasts only as long as there is a monopoly.

Sales The sales concept is based only on the selling of

goods and services.

The focus is on selling, without any interest in what is best for the person who ends up with the goods.

Hard selling

When the sales person presses for an order without taking account of the needs of the person buying.

Financial concept The financial concept is based on costs. It tends to be

an inward-looking, low risk approach.

The key is not to lose money. Therefore managers want proposals that are guaranteed to be successful.

But different from the above, marketers:

always work into the future always look for opportunities cannot ever guarantee a result forecast on experience and probability

1.2 Organising for marketing Every organisation has to be divided into

functions if it is to operate effectively.

A typical commercial organisation has the following functions:

Management Hierarchy

Managing Director

Finance Production Marketing Distribution

Director Director Director Director

Personnel

Director/Manager

Buying New product

(procurement) development

What does the finance team do? This team look after money issues, and will be

responsible for: Capital Revenue Purchases Credit Control Costing

What does the production team do? This team is responsible for everything that the

organisation makes, including: Factory management Manufacture Storage Within production will often be found:

Buying / procurement New Product Development (NPD)

What does the Personnel team do? The Personnel department is sometimes called the

Human Resources department, and is for: Recruiting Selecting Training

What does the distribution team do? To channel goods from the manufacturer to the

customer (PDM, Physical Distribution Management), and: Running depots, transport fleets, etc. Selecting distribution methods Planning efficient methods of distribution Storing and moving goods Making deliveries to customers Collecting returned goods

What does the marketing team do? This team is:

responsible for customer and consumer contact the only part of the organisation that has a direct

contact with the market the bridge to the customer

Marketing: the bridge to the customer

Communication

Goods/services

Cash (or similar benefit)

Information

Marketer Consumer

1.3 Marketing in Different industries and

sectors

Fast moving consumer goods (FMCG) Individual sales tend to be in small quantities People need to buy regularly A high level of repeat business Prices tend to be low, and profits small The large volume of small profits adds up to a large

overall profit (薄利多銷 )

Trusted branded products bring returning customers and profits.

Consumer durables Normally for the home, but will last a reasonable time

in use Each product tends to have a relatively high price Fewer products are sold But the profit on each is higher than on FMCG Repeat business is important, but buying is not very

frequent Length of life in use is an important buying point

Capital goods Needs large investment Potential customers are very few Each customer can be identified and contacted Big decisions; time is taken; big projects Potential competitors and their products will be known Potential profits will be high Repeat business is possible, but not frequent Reputation will be important

Small budget organisations Marketing on a small budget forces tight targeting, and

a creative use of ideas and funds Big organisations might have small marketing budget Marketers with small budget need to plan very

carefully to produce maximum return

The example of charities…

Business to business (B2B) marketing In fact, it is to market to the individuals working for

those businesses. Organisational buying is normally

well structured in large quantity Repeat business can extend over many years Getting a new order might represent the start of a long-term

business relationship.

1.4 Environmental issues Organisations, like individuals, exist in the real

world - a world full with STEEPLE factors Social and cultural Technological and product innovation Economic and market conditions Education, training and employment Political Legal Environmental protection

1.5 Legislation and codes of conduct

Legislation This is the law of the land, and has to be complied with.

Codes of conduct Professional bodies create a code of conduct that sets

out how their member should behave. Services set out codes of behaviour to cover what is

acceptable. e.g.: BCAP (the British Code of Advertising Practice)