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

Introduction to
Marketing Manage

Module 1

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

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Marketing Manage

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Meaning

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.

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Marketing Manage

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Definition

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.

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Marketing Manage

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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.

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The Marketing Process Model

Create value for customers & build Customer relationship

Understand the
marketplace &
customer needs
and wants

Design a
Customer-driven
Marketing
Strategy

Capture value
From Customers to
Create profits &
Customer quality

Introduction to
Marketing Manage

Construct a
Marketing Program
That delivers
Superior value

Build profitable
Relationships &
Create Customer
delight

Module 1

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

Introduction to
Marketing Manage

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Three Stages of Marketing

Evolution in the United States.
Product Orientation
Some industries & organizations remain at the product-orientation stage

Product Orientation

Sales Orientation

Other industries & organizations have progressed only to the sales-orientation stage

Product Orientation

Sales Orientation

Market Orientation

Many industries & organizations have progressed to the market-orientation stage

Late 1800s

Introduction to
Marketing Manage

Early 1930s

Mid 1950s

Module 1

1990s

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.

Introduction to
Marketing Manage

Module 1

Sales Orientation Stage

The world economic crisis of the late 1920s (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.

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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 salesorientation 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

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Importance of Marketing
Importance of Marketing can be understood in 4 different perspective

Global

Employment
&
Costs

Domestic
Creating
Utility

Organization
Personal
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Importance of Marketing

Global Perspective

Until the late 1970s, American firms had a large

and secure domestic market
1980s more foreign firms developed attractive
products, honed their marketing expertise, &
then successfully entered the U S market.
Imported products, such as office equipment,
autos, apparel, watches, semiconductors &
consumer electronics have been successful
At present US has been importing more than it
exports, creating large annual trade deficits

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Importance of Marketing
In Global Perspective Contd..

There will be a new challenges

The changes taking places in the
governments & economics of eastern Europe
& growing capitalism in China & former
Soviet Union will certainly create new &
stronger International Competitors
Trade agreements are also altering the global
business picture

The European Union, the North American Free

Trade Agreement,
The Asia-Pacific Economic Cooperation forum are
reducing economic barriers & liberalizing trade
between their members

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Importance of Marketing
In Global Perspective Contd..

Trade agreements increase the

marketing opportunities for firms, they
can often result in stiffened competition
for firms from outside
Considering these developments the US
firms look abroad, they are concluding
that their profit & Growth objectives are
most likely to be achieved through the
combination of domestic & international
marketing, rather than solely from
domestic marketing

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Importance of Marketing
In Domestic Perspective

Domestic Perspective

Aggressive, effective marketing practices have

been largely responsible for the high standard of
living in US
The efficiency of mass marketing-extensive &
rapid communication with customers through a
wide variety of media & distribution system that
makes product readily available to the
consumers
Since 1920 (except during World War II), the
available supply of products in Us has far
surpassed total demand
Making most products has been relatively easy;
the real challenge has been marketing them

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Importance of Marketing
In Domestic Perspective

Employment and Costs

The Significance of marketing in US Economy can

give an idea of how many of us are employed
between 1/4th & 1/3rd of US civilian labor force are
engaged in marketing activity, which includes
employees in retailing, wholesaling, transportation,
warehousing & communications industries & also
people who work in marketing departments of a
manufacturers & those who work in marketing in
agricultural, mining & service industries

Furthermore, jobs in marketing have increased at a

much more rapid rate than jobs in production,
reflecting marketings expanded role in economy

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Importance of Marketing
In Domestic Perspective

Creating Utility

A customer purchase a product because it provides

satisfaction

The want-satisfying power of a product is called as

Utility, & it comes in many forms. It is through
marketing that much of a products utility is created

Form utility changes makes the product valuable

Place utility when product is readily available

Time utility product available when you want

Information utility information of a product

existence

Possession utility created when a customer buys

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Importance of Marketing
In Organizational Perspective

Organizational Perspective

Marketing considerations should be an integral

part of all short-range & long-range planning in
any company

The success of any business comes from

satisfying the wants of its customers, which is
the social & economic basis for the existence of
all organizations

Although many activities are essential to a

companys growth, marketing is the only one
that produces revenue directly
The traditional approach of designing the product
by designers, pricing by finance managers have
changed in present marketing environment

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Importance of Marketing
In Personal Perspective

Personal / Individual Perspective

The reasons for understanding marketing globally in

our economy & in an individual organization are as
under;

How many marketers view us a part of their market

firms such as Nike, Microsoft, VISA & etc have
designed products, set prices, created
advertisements & chose the best way to make their
products available to us
Studying marketing will makes us better-informed
consumers, which helps to understand why some
firms are successful and others fail
Lastly, marketing may probably relates directly or
indirectly to our career aspirations

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Marketing Concepts

Components & outcomes of the marketing concept

MARKETING CONCEPT

Customer Orientation

Coordinated
Marketing
activity

Customer
Satisfaction

Organizations
Performance objectives

Organizational
Success

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Marketing Concepts

This definition of marketing rests as

the following core concepts; needs;
wants; & demands; products (goods,
services & ideas); values, cost &
satisfaction; exchange &
transactions; relationships &
networks; markets; & marketers &
prospects. These concepts are
illustrated in figure:

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The Core Concepts of Marketing

Needs, wants,
& demands

Products
(goods,
Services, Ideas)

Marketers &
prospects

Introduction to
Marketing Manage

Value, cost,
&
satisfaction

Markets

Module 1

Exchange &
transactions

Relationships
& networks

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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
dont want

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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)

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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

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Exchange & Transactions

People can obtain products in one of 4 ways:

Self-production hungry people can relieve through

hunting, fishing, or fruit gathering
By coercion hungry people can wrest or steal food
from others
By begging hungry people can approach others &
beg for food
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.

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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 partiescustomers, 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.

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Relationships & Networks

Two party Exchange Map Showing Want Lists of Both Parties

Construction Co. Want List

1. High-quality, durable equipment
2. Fair Price
3. On-time delivery of equipment
4. Good financing terms
5. Good parts & service

Caterpillar
(Marketer)

Construction Co.
(Prospect)
Caterpillar Want List
Good price for Equipment
On-time payment
Good word of mouth

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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, such as a
village square.
Marketers, however, see the sellers as constituting the
industry and the buyers as constituting the market

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A Simple Marketing System

Figure show the relationship between the industry & the market

The sellers send goods & services & communications

(ads, direct mail, & so forth) to market; in return they
receive money & information (attitudes, sales data, & so
forth)
The inner loop shows an exchange of money for goods &
services; the outer loop shows an exchange of
information.
Communication

Industry
(a collection
Of Sellers)

Goods / services
Money

Market
(a collection
of buyers)

Information

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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

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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

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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
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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

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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 serviceproduct mix that a company offers
Services Marketing Includes
Since Services are highly intangible, its
benefits are felt over a period of time & not
immediately

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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

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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
customers own competitive advantage

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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 customers perspective
at all levels of the organization

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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

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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 marketers 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, or

dedicated websites like shaadi.com or contest2win.com, etc

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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.

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Importance of Services Marketing

In most industrialized economies, expenditure on

services 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 firms 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

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Key Terms & Concepts

What are the Key Terms & Concepts that you have Understood?

Exchange
Marketing
Product-orientation
Sales-orientation
Marketing-orientation
Marketing concepts
Customer Relationship
Management
Mass communication

Introduction to
Marketing Manage

TQM, Value, Value

Creation
Return on Marketing
Investment
Marketing, Societal
Marketing Concept
Segments, Target, &
Position
Marketing, Ethics, &
Demand
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Bibliography

Meaning Marketing Management Marketing Management

9th Edition & Principles of Marketing 11th Edition Philip Kotler
PHI
Evolution Marketing Concepts & Cases 13th Edition J Stanton
(Indian Context) TMH
Importance Marketing Concepts & Cases 13th Edition J
Stanton (Indian Context) TMH
Concepts Marketing Management 9th Edition Philip Kotler
PHI & Marketing Concepts & Cases 13th Edition J Stanton
(Indian Context) TMH
Nature & importance of Services Marketing Marketing
Management Arun Kumar, Meenakshi Vikas & Marketing
Management 3rd Edition Rajan Saxena - TMH
Characteristics of Services Marketing Marketing
Management Arun Kumar, Meenakshi Vikas & Marketing
Management 3rd Edition Rajan Saxena - TMH

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