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MBA – 104
Marketing Management
What Marketing is Not These Alone….
Selling
Advertising
Promoting a product
Maximising profits
Maximising market share
Making a customer pay more
What is Marketing?
Marketing is an organizational function and a
set of processes for creating, communicating,
and delivering value to customers and for
managing customer relationships in ways that
benefit the organization and its stakeholders
So… Marketing is…
About the customer!
A process…. Not an event
About creating value
Definitely not selling!
More about developing relationships with customer
All this is ultimately supposed to benefit the shareholders of the company.
So… Marketing is…
CreationCommunicationDeliverValueTarget CustomersProfitably
C C D V T P
Marketing… In 3 Words!!
Meeting Needs Profitably!!!
Who is a Marketer?
Response could be….A PurchaseA Repeat purchaseGetting attentionGetting a voteNon use of a productPermission for a trip!.......
Anyone Seeking a Response
Then the Key to Marketing Success is…
Creating “Value”…. Making the customers
aware of it…. And delivering it to them
whenever they seek it…
But… What is Value???
You derive benefits from products
You pay a cost to acquire and use those products and services….. So you pay a cost to obtain the benefits
Value is the your assessment of the relative worth of the benefits from a product as compared to the cost you pay
The sum of the tangible and intangible benefits and costs…
What is Value???
CustomerValue
ExchangeValue
Perceived Use
Value,
Perceived Value
Perceptions of the customer about the attributes and qualities of the product in relation to his or her needs
How well the customer thinks the product will be able to satisfy the specific need he or she is looking to satisfy
So…. Perceived Value is customer’s judgment of a product and therefore subjective in nature
Exchange Value
The amount of money realized at the time exchange of the product takes place
Exchange value refers to the price you have to pay for acquiring a product
So… Exchange value is realized only when the product is sold and is realized by the “seller”
Exchange & Utility
The criteria needed for an exchange to occur:Must have something of value to exchangeNeed to be able to communicateMust be able to exchangeMust want to exchangeAt least 2 people needed for an exchange to occur
There are four types of utility:Form – Production of the good, driven by the marketing function.Place – Make product available where customers will buy the product. Time – Make product available when customers want to buy itPossession – Once you own the product, do what you want with it
What is the Value Chain?
Coordinated series or sequence of
functional activities necessary to transform
inputs into finished goods or services
customers value and want to buy
A Simple Value Chain
The Value Chain (VC) & the Firm
VC allows alignment of processes with customers. This generates a quality advantage.
VC focuses cost management efforts.
VC provides for efficient processes which improves the timeliness of operations.
Value Chain Management
Development of a set of functional-level
strategies that support a company’s
business-level strategy and strengthen its
competitive advantage
Levels of the Value Chain
1. Firm Level• Chain of activities for a firm operating in a specific industry
2. Industry Level• Various processes that are involved in producing goods, starting
with raw materials and ending with the delivered product
3. Global Value Chains• Value chain activities to produce goods or services, spread over
vast geographic distances
SupportActivities
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Human Resource Management
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What Happens When Value is Added?
Cotton Cotton Thread
CottonCloth
CottonShirt
BrandedCottonShirt
What is Customer Satisfaction?
Think of an incident in which you were “surprised and delighted” as a satisfied customer. How did that happen?
Think of another situation where you were very disappointed as a customer, and you did not return or you told others about your negative experience. How did that happen?
Class Discussion
So…. Customer Satisfaction is a function of
the VALUE of the product which is the
consequence of its UTILITY (Use Value) and
EXCHANGE (Exchange Value)
So… Customer Satisfaction is…
What is Marketing Management?
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 Beginning of the Marketing Era
LL Bean 1912, founded on the marketing concept, in his first circular:
"I do not consider a sale complete until goods are
worn out and the customer still satisfied. We will thank
anyone to return goods that are not perfectly
satisfactory... Above all things we wish to avoid having
a dissatisfied customer."
The Beginning of the Marketing Era
Peter Drucker, in 1954 said:
“If we want to know what business is we must first start with its
purpose...There is only one valid definition of business
purpose: to create a customer. What business thinks it
produces is not of first importance, especially not to the future
of the business or to its success. What the customer thinks he
or she is buying, what he or she considers "value" is decisive.
It determines what a business is, what it produces, and
whether it will prosper”
Where Do We Stand Today???
Social Responsibility Marketing
Relationship Marketing
Value Co-Creation
Integrated Marketing
Holistic Marketing
Internal Marketing
Performance Marketing
Green Marketing
We are still in the marketing age, but our understanding of what marketing means is changing…So… Some new concepts have been incorporated…
Marketing Philosophies / Orientations
The Production Concept
The Product Concept
The Selling Concept
The Marketing Concept
Production Orientation
Assumes that products that are widely and cheaply available will be preferred
Focus is on production efficiency, cost reduction & mass distribution
Was the norm with most companies at beginning of this century
Today, it is the orientation of companies operating in less developed markets or have chosen to serve “price sensitive” markets in developed markets
Product Orientation
The assumption is that the higher quality product or the product with more or better features will be preferred
The focus is on production process, product quality and having an “overall better product than the competitor”
Historically, product orientation came after the production dominated philosophy
Even today companies operating in non competitive markets or servicing non demanding market segments adopt this philosophy
The Selling Orientation
Assumes that customers will not buy unless “made to buy” or “convinced to buy”
Marketing for such an organization would mean aggressive sales and aggressive promotions
Historically was the norm after the product concept
Now it is a norm with companies that either sell “unsought products” or are unable to adjust their marketing programs to ever changing market realities
Marketing Orientation
Assumes that customer and customers’ needs should be the basis of all efforts by the company
Company will value and collect customer intelligence and competitor intelligence too
Products, policies and practices will remain “dynamic” and will change either “reactively” or “proactively”
Necessary feature of companies operating in competitive markets
Marketing Tasks
Environmental Analysis
Formulation of Marketing Strategies
Marketing Planning and Implementation
Strengthening Customer Relationships
Building Strong Brands
Communicating and Delivering Value to Customers
Concepts
Concepts
Needs, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets
NeedState of felt deprivationExample: Need food
WantsThe form of needs as shaped by culture and the individualExample: Want a Big Mac
DemandsWants which are backed by buying power
Core Concepts
Concepts
Needs, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets
Core Concepts Marketing offerCombination of products, services, information or experiences that satisfy a need or wantOffer may include services, activities, people, places, information or ideas
Concepts
Needs, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets
ValueCustomers form expectations regarding valueMarketers must deliver value to consumers
SatisfactionA satisfied customer will buy again and tell others about their good experience
Core Concepts
Concepts
Needs, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets
ExchangeThe act of obtaining a desired object from someone by offering something in returnOne exchange is not the goal, relationships with several exchanges are the goalRelationships are built through delivering value and satisfaction
Core Concepts
Concepts
Needs, wants, and demandsMarketing offers: including products, services and experiencesValue and satisfaction Exchange, transactions and relationships Markets
MarketSet of actual and potential buyers of a productMarketers seek buyers that are profitable
Core Concepts