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

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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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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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.

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.

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

Construct a
Marketing Program
That delivers
Superior value

Build profitable
Relationships &
Create Customer
delight

Three Stages of Marketing Evolution

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

Early 1930s

Mid 1950s

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.
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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.

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

Value, cost,
&
satisfaction

Markets

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
The
The
The
The

Exchange Concept
Production Concept
Product Concept
Sales Concept Diff b/w Marketing & Sales
Marketing Concept A Shift in orientation

From
From
From
From
From

production to marketing
product to customer
supply to demand
sales to satisfaction
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 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
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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 prenegotiated 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

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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