Marketing Management - 1

Rajeev Roy

What is ‘Marketing’?

1.Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders

2.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.

Marketing vs Sales

Peter Drucker

“The aim of marketing is to make sales superfluous”

Marketing vs Sales

• Marketing is a more comprehensive process

• Sales – focus on needs of Seller• Marketing – focus on needs of buyer

• Selling has a short term outlook.. Marketing has a long term vision

Importance of Marketing

• According to the Customer Service Institute, it costs as much as five times as much to acquire a new customer than it does to service an existing one.

• Customers tell twice as many people about a bad experience over a good one.

• For an average company, 65% of its business comes from its presently satisfied customers.

Marketing Myopia

There is no ‘growth’ industry

• Belief that growth is assured by an expanding and affluent population

• Belief that there is no competitive substitute for the industry’s major product

• Too much faith in mass production• Preoccupation with the product and with R&D

Demand

1. Negative Demand2. Non-existent Demand3. Latent Demand4. Declining Demand5. Irregular Demand6. Full Demand7. Overfull Demand8. Unwholesome Demand

Needs

Wants

Demand

Segmentation

Targeting

Positioning

Marketing

Product Customer Solution

Price Cost

Place Convenience

Promotion Communication

4 Ps

4 Cs

5 C's

• Customer (customer needs, segments, consumer behavior)

• Company Skills (brand name, image, production capability, financial strengths, organization, etc.)

• Competition (actions are interrelated, market environment)

• Collaborators (downstream wholesalers or retailers, upstream suppliers)

• Context (culture, politics, regulations, social norms)

Changes

1.Marketing Department to Marketing Organisation2.Focus on Product Unit to focus on Segments3.Working with fewer suppliers4.Emphasis on intangible assets5.Online interactions6.Market share vs share of wallet7.Glocal8.Stakeholders vs Shareholders

Marketing Challenges

The danger of 1P marketing

Training

Getting reliable/useful customer info

Low cost, high quality competition

Power of distributors/retailers

Measuring impact of marketing

Marketing Sins

1. The firm is not sufficiently market-focused or customer-driven

2. The firm does not fully understand its target customers

3. The firm needs to better define its competitors and monitor them

4. The firm is not good at finding new opportunities5. The firm has not managed well its relationship

with stakeholders

Cont..

6. The firm’s market plans and planning processes are deficient

7. The firm’s products need tightening8. Weak brand building and communication9. The firm is not well organised to carry on

marketing10.Lacking in use of technology

Core Competency

• It is a source of competitive advantage• It has an application in a wide variety of

markets• It is difficult for competitors to emulate

Porter’s Generic Strategies

• Overall Cost Leadership• Differentiation• Focus

SWOT

SWOT

• Only accept precise, verifiable statements • Ruthlessly prune long lists of factors, and prioritize

factors so that you spend your time thinking about the most significant factors.

• Apply it at the right level - for example, at product or product line level, rather than at the much vaguer whole company level.

• Supplement it with other option-generation tools - none is likely to be completely comprehensive.

STEP

• Socio-Cultural

• Technological

• Economic

• Political / Legal

• Natural

Porter’s Five Forces

Supplier Power

• The market is dominated by a few large suppliers • There are no substitutes for the particular input,• The suppliers customers are fragmented• The switching costs from one supplier to another

are high,• There is the possibility of the supplier integrating

forward • The buying industry hinders the supplying industry

in their development • The buying industry has low barriers to entry.

Customer Power

• They buy large volumes, • There is a concentration of buyers,• The supplying industry comprises a large number of

small operators• The supplying industry operates with high fixed costs• The product is undifferentiated • Switching to an alternative product is relatively simple• Customers have low margins and are price-sensitive, • Customers could produce the product themselves,• The product is not of strategic importance for the

customer,• There is the possibility for the customer integrating

backwards.

Entry Barriers

• Economies of scale • High initial investments and fixed costs,• Cost advantages of existing players due to experience

curve • Brand loyalty of customers• Protected intellectual property like patents, licenses etc,• Scarcity of important resources, e.g. qualified expert

staff• Distribution channels are controlled by existing players,• Existing players have close customer relations• High switching costs for customers• Legislation and government action 

Competitive Rivalry

• There are many players of about the same size,• Players have similar strategies• There is not much differentiation between

players and their products, hence, there is much price competition

• Low market growth rates (growth of a particular company is possible only at the expense of a competitor),

• Barriers for exit are high