MARKETING MANAGEMENT

MARKETING CONCEPT MODULE 1 (3 Hours) Introduction: Nature and scope of Marketing, Evolution, Various Marketing orientations, Marketing Vs Selling concept, Consumer Need, Wants and Demand concepts. DEFNITION The Marketing concept is a point of view on business. It enumerates that any business is essentially a need satisfying process. It also enunciates that all the goals of the organization including profit be realized three customer orientation. Integrated management action and generation of customer satisfaction. CONCEPTS OF MARKETING.

THE EXCHANGE CONCEPT The exchange concept of marketing, as the very name indicates, holds that the exchange of a product between the seller & the buyer is the central idea of marketing. While exchange does form a significant part of marketing as a mere exchange process would amount to a gross undermining of the essence of marketing. A proper scrutiny of the marketing process would readily reveal that marketing is much broader than exchange. Exchange, at best, covers the distribution aspect and the price mechanism involved in marketing. The important aspects of marketing, such as concern for customer, generation
RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

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of value satisfaction creative selling & integrated action for serving the customer, get completely overshadowed in the exchange concept of marketing. THE PRODUCTION CONCEPT It is one of the oldest concepts of business. The production concept holds that consumers will prefer products that are widely available and inexpensive. Managers of productionoriented businesses concentrate on achieving high production efficiency, low costs, massdistribution. They assume that consumers are primarily interested in product availability and low prices. This orientation makes sense in developing countries, where consumers are more interested in obtaining the product than in its features. It is also used when a company wants to expand the market. Some service organizations also operate on production concept. Many medical & dental practices are organized on assembly-line principles, as are some government agencies. Although this mgt orientation can handle many cases per hour, it is open to charges of impersonal and poor-quality service. THE PRODUCT CONCEPT The product concept is somewhat different from the production concept. Whereas the production concept seeks to win markets & profits via high volume of production and low unit costs, the product concept seeks to achieve the same result via product excellence- improved products, new products and ideally designed & engineered products. It also emphasis on quality assurance. Managers in these organizations focus on making superior products & improving them overtime. They assume that buyers admire well-made products and can evaluate quality & performance. Mgt might commit the Better-mousetrap fallacy, believing that it will lead people to beat a path to its door. Example:- web T V THE SELLING CONCEPT The selling concept holds that consumers and businesses, if left alone, will ordinarily not buy enough of the organizations products. The organization must, therefore, undertake an aggressive selling and promotion effort. This concept assumes that consumers typically show buying inertia or resistance & must be coaxed into buying. It also assumes that the co. has a whole battery of effective selling and promotion tools to stimulate more buying. The selling concept is practiced most aggressively with unsought goods, goods that buyers normally do not think of buying, such as insurance, encyclopedias, and funeral plots. It is also practiced in non-profit area by fund raisers, college admission offices, & political parties.
RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

THE MARKETING CONCEPT

This concept emerged in mid-1950 and challenged the preceding concepts. The MARKETING concept was born out of the awareness that marketing starts with determination of consumer wants & ends with the satisfaction of those wants. The concept puts the customer at both the beginning and the end of business. It stipulates that the company should be organized totally around the marketing function, anticipating, stimulating & meeting customers requirements. The concept rests on the realization that a business cannot succeed by supplying products and services that ae not properly designed to serve their needs. Every depart. & every worker and every manager will THINK CUSTOMER &ACT CUSTOMER. Evidently, the concept represent a radically new approach to business. Marketing concept represents essentially a change in orientation on the part of mgt towards business. The marketing concept rests on four pillars: 1. Target market- EX:TERRA LYCOS 2. Customer needs-EX:NOKIA & SONY ERRICSON 3. Integrated marketing4. Profitability-EX:DISNEY, WALL-MART THE CUSTOMER CONCEPT The ability of a company to deal with customers one at a time has become practical as a result of advances in factory customization, computers, the internet, & database mktg software. In this concept the companies hope to achieve profitable growth through
RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

capturing a larger share of each customers expenditures by building high customer loyalty & focusing on customer lifetime value. The required information collection hardware, and software may exceed payout. It works for best co. that normally collect a great deal of individual customer information, carry a lot of products that can be crosssold, carry products that need periodic replacement or upgrading, & selling products of high value. THE SOCIETAL MARKETING CONCEPT

... make marketing decisions by considering consumers wants, the companys requirements, consumers long-run interests and societys long-run interests.
Principles of Marketing by Kotler/Armstrong, Prentice Hall s

Societal

marketing

blends

social,

company

and

customers

wants.

The Societal Marketing Concept. This concept holds that the organizations task is to determine the needs, wants, and interests of target markets and to deliver the desired satisfactions more effectively and efficiently than competitors (this is the original Marketing Concept). Additionally, it holds that this all must be done in a way that preserves or enhances the consumers and the societys well-being. Unfortunately, satisfying customers short-term needs may not be compatible with societys needs. For instance, your customers may prefer large automobiles, disposable diapers, hamburgers, no-deposit bottles, etc. Society is better off if we drive small cars, use cloth diapers, and eat soy burgers. Should a firm worry about its customers shortterm needs, or consider what is best for society?.
RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

Define the mission. A mission is the purpose of the organization. It is why the organization exists. Thus, planning begins with clearly defining the mission of the organization. The mission statement is broad, yet clear and concise, summarizing what the organization does. It directs the organization, as well as all of its major functions and operations, to its best opportunities. Then, it leads to supporting tactical and operational plans, which, in turn leads to supporting objectives. A mission statement should be short no more than a single sentence. It should be easily understood and every employee should be able to recite it from memory. An explicit mission guides employees to work independently and yet collectively toward the realization of the organization's potential. The mission statement may be accompanied by an overarching statement of philosophy or strategic purpose intended to convey a vision for the future and an awareness of challenges from a top-level perspective WHAT IS SWOT ANALYSIS? Conduct a situation or SWOT analysis by assessing strengths and weaknesses and identifying opportunities and threats. A situation or SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis is critical to the creation of any strategic plan. The SWOT analysis begins with a scan of the external environment. Organizations must examine their situation in order to seek opportunities and monitor threats. Sources of information include customers (internal and external), suppliers, governments (local, state, federal, international), professional or trade associations (conventions and exhibitions), journals and reports (scientific, professional, and trade). SWOT is the assumptions and facts on which a plan will be based. Analyzing strengths and weaknesses comprises the internal assessment of the organization. Assess the strengths of the organization. What makes the organization distinctive? (How efficient is our manufacturing? How skilled is our workforce? What is our market share? What financing is available? Do we have a superior reputation?) Assess the weaknesses of the organization. What are the vulnerable areas of the organization that could be exploited? (Are our facilities outdated? Is research and development adequate? Are our technologies obsolete?) What does the competition do well? Analyzing opportunities and threats comprises the external assessment of the environment. Identify opportunities. In which areas is the competition not meeting customer needs? (What are the possible new markets? What is the strength of the economy? Are our rivals weak? What are the emerging technologies? Is there a possibility of growth of existing market?) Identify threats. In which areas does the competition meet customer needs more effectively? (Are there new competitors? Is there a shortage of resources? Are market tastes changing? What are the new regulations? What substitute products exist?) The best strategy is one that fits the organization's strengths to opportunities in the environment. The SWOT analysis is used as a baseline for future improvement, as well as gap analysis. Comparing the organization to external benchmarks (the best practices) is used to assess
RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

current capabilities. Benchmarking systematically compares performance measures such as efficiency, effectiveness, or outcomes of an organization against similar measures from other internal or external organizations. This analysis helps uncover best practices that can be adopted for improvement. (See Camp, R. C. Benchmarking: The search for industry best practices that lead to superior performance. Norcross, GA: Industrial Engineering and Management Press, 1993.) Benchmarking with other organizations can help identify a gap. Gap analysis identifies the progress required to move the organization from its current capabilities to its desired future state. In this way, the organization can adapt to the best practices to improve organizational performance. Set goals and objectives. Strategic goals and objectives are developed to bridge the gap between current capability and the mission. They are aligned with the mission and form the basis for the action plans. Objectives are sometimes referred to as performance goals. Generally, organizations have long-term objectives for such factors as return on investment, earnings per share, or size. Furthermore, they set minimum acceptable standards or common-sense minimums. In addition, certain limitations, either explicit or implicit, such as "must provide jobs for existing employees" may exist. Objectives elaborate on the mission statement and constitute a specific set of policy, programmatic, or management objectives for the programs and operations covered in the strategic plan. They are expressed in a manner that allows a future assessment of whether an objective has been achieved. Develop related strategies (tactical and operational). Tactical plans are based on the organization's strategic plan. In turn, operational plans are based on the organization's tactical plans. These are specific plans that are needed for each task or supportive activity comprising the whole. Strategic, tactical, and operational planning must be accompanied by controls. Monitoring progress or providing for follow-up is intended to assure that plans are carried out properly and on time. Adjustments may need to be made to accommodate changes in the external and/or internal environment of the organization. A competitive advantage can be gained by adapting to the challenges. What is Tactical Plans? Top level managers set very general, long-term goals that require more than one year to achieve. Examples of long-term goals include long-term growth, improved customer service, and increased profitability. Middle managers interpret these goals and develop tactical plans for their departments that can be accomplished within one year or less. In order to develop tactical plans, middle management needs detail reports (financial, operational, market, external environment). Tactical plans have shorter time frames and narrower scopes than strategic plans. Tactical planning provides the specific ideas for implementing the strategic plan. It is the process of making detailed decisions about what to do, who will do it, and how to do it. Introduction
RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

Tactical planning deals primarily with the implementation phase of the planning process Tactical planning turns strategy into reality Tactical planning usually has a 1-2 year time horizon Tactical planning is usually tightly integrated with the annual budget process

Elements of tactical planning

Project plans and RFCs Project budgets Project reviews Monthly reports Annual reports

Project plans

Project planning requires consideration of many issues o Existing environment o User needs o Available expertise o Alternative solutions o Budget and time constraints o Support issues Project teams are generally assembled to address these issues

Project teams and RFC's

RFC: Request for Comments The RFC serves two primary functions It provides a framework to direct activities of the project team It acts as a vehicle for gathering input and providing information to stakeholders outside the project team Development of an RFC will likely require research and consultation with vendors (including possibly a formal request for information)
o o

The RFC may result in consensus decisions but it does not guarantee that outcome if the alternative implementation options are many and the preferable solution not so obvious Serves as a resource for an RFP

Structure of an RFC

Executive summary

RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

Statement of overall goal Summary of existing environment Outline of technical issues, possibly including a technology primer Evaluation of tactical alternatives Evaluation of existing vendor offerings If possible (i.e., a reasonable consensus exists within the project team) a proposed course of action, including timeframe and budget

Implementation Plan

The RFC may serve as a framework for an implementation plan More detailed implementation planning is often required Use of project management software is desireable Use of regularized reporting via electronic and face-to-face meetings is usually required For information updates, electronic updates are most efficient; when issues need to be resolved, a meeting is usually more effective

Annual Reports

An annual report plays an important role in tactical planning Provides a summary of the mission and goals of the organization Reviews accomplishments based on project goals outlined in previous year's report Proposes changes in project direction or organization Outlines project goals for the coming year Should be keyed into the annual capital and operating budget plans

Monthly reports

Help project managers to organize tasks and monitor progress Should be part of the normal work process and not busy work Each project should be given a project number Monthly summary should include overview of work accomplished in previous month Monthly summary should note any slippage in implementation target date Monthly summary should note any outstanding issues that require management attention

What are Operational Plans? Supervisors implement operational plans that are short-term and deal with the day-today work of their team. Short-term goals are aligned with the long-term goals and can be achieved within one year. Supervisors set standards, form schedules, secure resources,
RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

and report progress. They need very detailed reports about operations, personnel, materials, and equipment. The supervisor interprets higher management plans as they apply to his or her unit. Thus, operational plans support tactical plans. They are the supervisor's tools for executing daily, weekly, and monthly activities. An example is a budget, which is a plan that shows how money will be spent over a certain period of time. Other examples of planning by supervisors include scheduling the work of employees and identifying needs for staff and resources to meet future changes. Resources include employees, information, capital, facilities, machinery, equipment, supplies, and finances. Operational plans include policies, procedures, methods, and rules. The terms themselves imply different degrees of scope. A policy is a general statement designed to guide employees' actions in recurring situations. It establishes broad limits, provides direction, but permits some initiative and discretion on the part of the supervisor. Thus, policies are guidelines. A procedure is a sequence of steps or operations describing how to carry out an activity and usually involves a group. It is more specific than a policy and establishes a customary way of handling a recurring activity. Thus, less discretion on the part of the supervisor is permissible in its application. An example of a procedure is the sequence of steps in routing of parts. A method sets up the manner and sequence of accomplishing a recurring, individual task. Almost no discretion is allowed. An example of a method is the steps in cashing a check. A rule is an established guide for conduct. Rules include definite things to do and not to do. There are no exceptions to the rules. An example of a rule is "No Smoking." Monitor the plan. A systematic method of monitoring the environment must be adopted to continuously improve the strategic planning process. To develop an environmental monitoring procedure, short-term standards for key variables that will tend to validate the long-range estimates must be established. Although favorable long-range values have been estimated, short-term guidelines are needed to indicate if the plan is unfolding as hoped. Next, criteria must be set up to decide when the strategy must be changed. Feedback is encouraged and incorporated to determine if goals and objectives are feasible. This review is used for the next planning cycle and review. Introduction

Deals with the day-to-day and week-to-week work routine Focus is on routine operational tasks and long-term projects Primary goal is to communicate In many organizations, people are asked to do both Weekly meetings are often used to coordinate efforts and review progress Weekly or monthly summaries are often used to inform others

Structure

The structure of operational planning is closely related to organizational structure

RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

In a traditional hierarchical organization (i.e., UNIX team, network engineering team), team leaders usually assemble with a senior manager on a regular basis to share information Additional periodic meetings are often required to coordinate efforts with other units (i.e., the systems group should meet with the user services group on a regular basis) In a process-oriented organization, teams are more ad-hoc in nature, so a mechanism must be put in place to insure communication

Electronic versus face-to-face "meetings"

Both means of communication should be used Sometimes, there is no substitute for face-to-face interaction The worst face-to-face meetings are those where everyone simply makes announcements and disseminates information (that can be accomplished more effectively electronically) Periodic summaries should be distributed outside the team

Discuss Annual marketing Plan. Annual marketing plan is a short term marketing plan, covering one year. A separate annual plan is prepared for each product plan is prepared for each product line, major product, brand or market. Each marketing plan incorporates strategies and tactics relating to the market mix for a particular plan deals with tactical details which are ignores in strategic marketing plan. It gives complete guidance to all marketing executives in each step of marketing operations. Thus it itself acts as a ready reckoner to the marketing personnel. Overall corporate mission, corporate objectives and corporate strategies are determined by the top corporate management, under comprehensive business planning. Each strategic business unit management will be responsible for determining the unit objectives, strategies tuned with the corporate mission and strategies. Under each SBU we will have functional plans for each functional area. Marketing department will have its own marketing objectives, strategies and marketing programmes, of course, turned with general and SBU objectives and strategies. Marketing program will cover strategies relating to relating to all components of marketing mix (4 Ps). What Are The Major steps in marketing planning? 1. Study of internal environment through marketing information and research facilities.
RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

2. 3. 4. 5. 6. 7. 8. 9.

Study of internal environment through sales audit and cost analysis. Determination of overall mission and goals. Assessing marketing opportunities. Determination of company objectives. Laying sown company strategies. Fixing specific marketing strategies. Developing marketing strategies in each area of marketing mix. Integrating marketing mix and providing time bound. 10 mplementing marketing plans and marketing control.

Checklist of Annual Marketing Plan:1. Situation analysis on market demand, market environment and market performance, sales forecast. 2. Determination of marketing goals on assessment of marketing opportunities. 3. Review of marketing goals on assessment of marketing opportunities. 4. Developing integrated marketing mix for each marketing segment. 5. Plans of action with schedules, assignment of responsibility and grant of authority. Thus, marketing. 6. Marketing tactics, e.g., discounts allowances, prices, gifts and any other support during the year to manoeuvre the market. 7. Continuous monitoring of performance, comparison of actual results with the set standards, and removal of deficiencies. The marketing objectives are the standards for comparison. Aggressive marketing leadership plus effective marketing control assure marketing success even against intense competition.

RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.

MARKETING MANAGEMENT

RAGHAVENDRA.K.A Asst. Professor SJBIT, Bangalore.