marketing : concepts and fundamentals

Marketing Management

Marketing Management

• After this presentation you will understand:

• Concept of Marketing Management• Marketing Mix• Product Policy• New Product Development• Product Life Cycle• Channels of Distribution

Market=?

• Market means that customers who have purchased or want to purchase a certain product or service.

• Market = population+ Purchasing Power + Purchasing Need

Market=?

• Consumer Market• Business Market• Global Market• Nonprofit and Government Markets

Marketing=?

• Selling?• Advertising?• Promotions?• Making products available in stores?• Maintaining inventories?

Yes! All of the above, plus much more!

Marketing=?

• Marketing is a societal 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.

- Philip Kotler

Marketing=? & Marketing Management=?

• Is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, services to create exchanges that satisfy individual and organizational goals.

• 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 Marketing ProcessA Five-Step Process

1. Understand the marketplace and customer needs and wants

2. Design a customer-driven marketing strategy

3. Construct a marketing program that delivers superior value

4. Build profitable relationships and create customer delight

5. Capture value from customers to create profits and customer quality

Simple Marketing System

Industry(A collection

of sellers)

Market(A collection

of Buyers)

Goods/Services

Money

Communication

Information

Core Marketing Concepts

Understanding the Core Concepts

• Needs, wants, and demands

• Marketing offers: including products, services and experiences

• Value and satisfaction • Exchange, transactions

and relationships• Markets

• Need– State of felt deprivation– Example: Need food

• Wants– The form of needs as

shaped by culture and the individual

– Example: Want a Big Mac• Demands

– Wants which are backed by buying power






• Marketing offer– Combination of

products, services, information or experiences that satisfy a need or want

– Offer may include services, activities, people, places, information or ideas

Understanding the Core Concepts• Needs, wants, and

demands• Marketing offers:

including products, services and experiences



• Value– Customers form

expectations regarding value

– Marketers must deliver value to consumers

• Satisfaction– A satisfied customer will

buy again and tell others about their good experience




• Value and satisfaction • Exchange, transactions and

relationships• Markets

• Exchange– The act of obtaining a

desired object from someone by offering something in return

– One exchange is not the goal, relationships with several exchanges are the goal

– Relationships are built through delivering value and satisfaction






• Market– Set of actual and

potential buyers of a product

– Marketers seek buyers that are profitable

Marketing strategies

• Meaning:• “Marketing Strategy is a set of specific ideas

and actions that outline and guide decisions on the best or chosen way to create, distribute, promote, and price a product or service(Manages the marketing mix variables).”

• There are over 52 and more types marketing strategies.

• We’ll see some of them from next slide onwards…

Types of Marketing Strategies

• Cause Marketing: Find a cause both your customers and your company care about. It can create magic for your business.

• Relationship Marketing: Focus on building relationships with your customers instead of always exclusively trying to sell them something (called transactional marketing). Customers who love your brand more will also spend more money with your brand.

Many traditional retailers have found thisto be true. Walgreens has seen thatcustomers who buy from all of theirpurchasing channels (store, web, mobile,etc.) buy up to six times more than theaverage customer that only buys in theirstore.

• Offline Marketing: Find new ways of

• integrating offline marketing with new

• technologies to create more engaging

• customer experiences.The Coca-Cola company has createvending machines that invitecustomers to hug them. Thiscontinues to tie the Coca-Cola brandto the core emotion of happiness,but also invites customers toexperience the real product offline.

• Digital Marketing: Use various digital devices

• like smartphones, computers, tablets, or digital

• billboards to inform customers and business

• partners about your products.

• Scarcity Marketing: Where appropriate,

• consider making your products accessible

• to only a few customers.

• And many more..(2 lectures is also not enough…)

Rolls-Royce’s release of their Year ofthe Dragon Collection edition of thePhantom sold quickly. Although thecost of the car was higher than otherluxury cars, the scarcity drove thedesire and the price.

Marketing mix

• Definition of Marketing mix from Economic Times:– “The marketing mix refers to the set of

actions, or tactics, that a company uses to promote its brand or product in the market. The 4Ps make up a typical marketing mix - Price, Product, Promotion and Place. However, nowadays, the marketing mix increasingly includes several other Ps like Packaging, Positioning, People and even Politics as vital mix elements.”

Marketing mix

• The Marketing Mix is one of two interrelated components of strategy

• Marketing Mix strategy is choosing and implementing the best possible course of action to attain the organization’s long-term objectives and gain competitive edge.

Marketing mix

• Price: refers to the value that is put for a product. It depends on costs of production, segment targeted, ability of the market to pay, supply - demand and a host of other direct and indirect factors. There can be several types of pricing strategies, each tied in with an overall business plan. Pricing can also be used a demarcation, to differentiate and enhance the image of a product.

• Product: refers to the item actually being sold. The product must deliver a minimum level of performance; otherwise even the best work on the other elements of the marketing mix won't do any good.

Marketing mix

• Place: refers to the point of sale. In every industry, catching the eye of the consumer and making it easy for her to buy it is the main aim of a good distribution or 'place' strategy. Retailers pay a premium for the right location. In fact, the mantra of a successful retail business is 'location, location, location'.

Marketing mix

• Promotion: this refers to all the activities undertaken to make the product or service known to the user and trade. This can include advertising, word of mouth, press reports, incentives, commissions and awards to the trade. It can also include consumer schemes, direct marketing, contests and prizes.

Marketing mix

Marketing Mix

• Promotions has four components called the Promotions Mix as follows:

• Advertising – to effectively inform and persuade the target market

• Public Relations – to offer a positive image of the company and the brand

• Selling – to get the customers buy

• Sales Promotions – to convince customers to buy immediately

Product Policy

• Product policies are the general rules set by the management.

• Product policy guides the marketing activities of the firm and helps it to make the right products to the consumers.

• Product policy is concerned with defining type, volume and timing of products a company offers for sale.

Product Policy

• A product policy generally covers the follows:

Product planning and development Product line Product mix Product branding Product positioning Product packaging

New-Product Development Strategy

• Strategies for Obtaining New-Product Ideas:

Acquisition of companies, patents, licenses

Original products, improvements, modifications

• To suit the changes in customers needs• To adopt new technological advances

and avoid obsolesce• To match competition• Product Life Cycle Concept• To bring down the cost

Reasons for introducing new products

Major Stages in New-Product Development

• Idea generation• Idea screening• Concept development and testing• Marketing strategy development• Business analysis• Product development• Test marketing• Commercialization

• Ideas can be generate from the following :

Company employeesCustomersCompetitorsDistributorsSuppliers

Idea Generation

Idea Screening

• Process to spot good ideas.• Develop system to estimate: market

size, product price, development time and costs, manufacturing costs, and rate of return.

• Evaluate these findings against set of company criteria for new products.

Concept Development and Testing

• Product Idea: idea for a possible product that the company can see itself offering.

• Product Concept: detailed version of the idea stated in meaningful consumer terms.

• Product Image: the way consumers perceive an actual or potential product.

Marketing Strategy Development

• Part One Describes:– The target market, planned product

positions, sales, market share, and profit goals

• Part Two Outlines the First Year’s:– Product’s planned price, distribution,

and marketing budget• Part Three Describes Long-Run:

– Sales and profit goals, marketing mix strategy

Business Analysis

• Involves a review of the sales, costs, and profit projections to assess fit with company objectives.

• If yes, move to the product development phase.

Product Development

• Develop concept into physical product

• Calls for large jump in investment• Prototypes are made• Prototype must have correct

physical features and convey psychological characteristics

Test Marketing

• Product and program introduced in more realistic market setting.

• Not needed for all products.• Can be expensive and time

consuming, but better than making major marketing mistake.

Commercialization

• Must decide on timing (i.e., when to introduce the product).

• Must decide on where to introduce the product (e.g., single location, state, region, nationally, internationally).

• Must develop a market rollout plan.

Organizing New-Product Development

• Sequential Approach: each stage completed before

moving to next phase of the project.

• Simultaneous Approach: Cross-functional teams work

through overlapping steps to save time and increase effectiveness.

The Product Life Cycle

• Introduction• Growth• Maturity• Saturation• Decline

Introduction Stage of PLC

The Introduction stage is probably the most important stage in the PLC. In fact, most products that fail do so in the Introduction stage.

This is the stage in which the product is initially promoted.

Public awareness is very important to the success of a product.

If people don't know about the product they won't go out and buy it.

Features

• Sales: low• Costs: high cost per customer• Profits: negative• Marketing Objective: create product

awareness and trial• Product: offer a basic product• Price: use cost-plus formula• Distribution: build selective distribution• Promotion: heavy to entice product trial

Products presently in introduction stage

HOLOGRAPHIC PROJECTIONS

Minority Report Gloves

Growth Stage of PLC

• If the company is lucky enough to get their product out of the Introduction stage, then enter this stage.

• The Growth stage is where the product starts to grow.

• In this stage a very large amount of money is spent on advertising.

• (because the company want to concentrate of telling the consumer how much better the product is than the competitors' products.)

Features

• Sales: rapidly rising• Costs: average cost per customer• Profits: rising• Marketing Objective: maximize market

share• Product: offer extension, service, warranty• Price: penetration strategy• Distribution: build intensive distribution• Promotion: reduce to take advantage of

demand

Products presently in growth stage

BLU-RAY tablet pc’s

Maturity Stage of PLC

• During this stage sales grow at a very fast rate and then gradually begin to stabilize.

• The key to surviving this stage is differentiating the product from the similar products offered by the competitors.

• the company must make the product stand out among the rest Due to the fact that sales are beginning to stabilize.

Features

• Sales: peak• Costs: low cost per customer• Profits: high• Marketing Objective: maximize profits while

defending market share• Product: diversify brand and models• Price: match or best (competitors)• Distribution: build more intensive

distribution• Promotion: Increase to encourage brand

switching

Three ways to be stand there in maturity:

1. Modifying the Market: Increase the consumption of the current product.

• How?– Look for new users and market

segments– Reposition the brand to appeal to

larger or faster-growing segment– Look for ways to increase usage

among present customers

2. Modifying the Product: Changing characteristics such as quality, features, or style to attract new users and to inspire more usage.

• How?– Improve durability, reliability,

speed, taste– Improve styling and attractiveness– Add new features– Expand usefulness, safety,

convenience



3. Modifying the Marketing Mix: Improving sales by changing one or more marketing mix elements( price, place, promotion and product)

• How?– Cut prices– Launch a better ad campaign– Move into larger market channels– Offer new or improved services to

buyers

Products presently in maturity stage

Saturation

• This is a period of stability. The sales of the product reach the peak and there is no further possibility to increase it.

• This stage is characterized by:– Saturation of sales (at the early part of

this stage sales remain stable then it starts falling).

– It continues till substitutes enter into the market.

– Marketer must try to develop new and alternative uses of product.

Decline Stage of PLC

• This is the stage in which sales of the product begin to fall.

• Either everyone that wants to has bought the product or new, more innovative products have been created that replace that product.

• Many companies decide to withdrawal their products from the market due to the downturn.

• The only way to increase sales during this period is to cut your costs reduce your spending.

Features

• Sales: declining• Costs: high cost per customer• Profits: declining• Marketing Objective: reduce

expenditures• Product: phase out weak items• Price: cut price• Distribution: selective--phase out

unprofitable outlets• Promotion: reduce to minimal level

Products presently in decline stage

Product Life Cycle through graph

Summary of Product Life Cycle

Channels of Distribution

• Marketing channels are set of interdependent organizations involved in the process of making the product or service available for use or consumption.

• They are the set of pathways a product or service follow after production.

Importance of channels

• Decisions about the marketing channels are among the most critical management decisions.

• They just not serve markets, they make market.

• Channels chosen affects all other marketing decisions.

• Firm’s sale depends upon training and motivation of dealers.

Classification of channels/channel levels

Channels of distribution

0-Level 1-Level 2-Level 3-Level

Channels of Distribution

0-Level

manufacturer

Consumer

1-Level

manufacturer

Consumer

Retailer

2-Level

manufacturer

Consumer

Retailer

Wholesaler

3-Level

manufacturer

Consumer

Wholesaler

Retailer

Jobber

Intermediaries

• Intermediaries are the middlemen and signify those individuals in the channels that either take title to take goods and sell at profit.

• They are directly involved in process of flow of goods from manufacturer to consumer.

Types of intermediaries

1. Merchant middlemeni. Wholesalers

ii. Retailers2. Agents

iii. Brokersiv. Commission agents

v. Selling agentsvi. Factors

vii. Clearing agentsviii. auctioneer

Factors governing the choice of channel of distribution

Factors

Product

factorsMarket factors

Environment

al factors

Institutional

FactorsUnit

Factors

Product factors

• Product nature.• Technical nature: simple or complex.• The length of product line.• The market position: market position of

manufacturer.

The market factors

• The existing market structure.• The nature of purchase deliberations.• Availability channel.• competitor's channels.

Institutional factors

• The financial ability of channel members.

• The promotional ability of channel members.

• The post-sale service ability.

Unit factors

• The company’s financial position.• The extent of market control desired.• The company reputation.• The company marketing policies.

Thank You