7/11/2023

Introduction to Marketing
Management
Session 2 & 3

[Link].B., Batch of 2022

Learning Objectives
• Define the scope of marketing.
• Describe the new marketing realities.
• Explain the role of marketing in the organization.
• Illustrate how to organize and manage a modern
marketing department.
• Explain how to build a customer-centric
organization.

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The Scope of Marketing

• Marketing is about identifying and meeting human
and social needs
• The social definition of marketing: 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.
• AMA’s formal definition: Marketing is the activity, set
of institutions, and processes for creating,
communicating, delivering, and exchanging offerings
that have value for customers, clients, partners, and
society at large

Marketing Management
• The art and science of choosing target markets and
getting, keeping, and growing customers through
creating, delivering, and communicating superior
customer value
• Marketing management takes place when at least one
party to a potential exchange thinks about the means
of achieving desired responses from other parties.

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Short Video on Marketing

What is Marketing

What is Marketed? (1 of 2)
• Marketing involves 10 different domains:
• Goods
• Services
• Events
• Experiences
• Persons

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What is Marketed? (2 of 2)
• Places
• Properties
• Organizations
• Information
• Ideas

Who Markets?
• A marketer is someone who seeks a response—
attention, a purchase, a vote, a donation—from
another party
• A marketer seeks to influence the level, timing, and
composition of demand to meet the organization’s
objectives.

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Five Basic Markets

• Traditionally, a “market” was a physical place where buyers and sellers gathered to
buy and sell goods.

• Economists describe a market as a collection of buyers and sellers who negotiate

transactions that involve a particular product or product class (such as the housing
market or the grain market etc).

There are Five Basic Markets

• Resource markets
• Manufacturer markets
• Consumer markets
• Intermediary goods markets
• Government markets
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Structure of Goods, Services, and Money Flows in a Modern Exchange Economy

Manufacturers go to resource markets (raw material markets, labor markets, money markets), buy resources and
turn them into goods and services, and sell finished products to intermediaries, who sell them to consumers.
Consumers sell their labor and receive money with which they pay for goods and services. The government collects
tax revenues to buy goods from resource, manufacturer, and intermediary markets and uses these goods and
services to provide public services. Each nation’s economy, and the global economy, consists of interacting sets of
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markets linked through exchange processes.

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The Market Exchange

• Marketers view industry as a group of sellers and use the term
market to describe customer groups

There are need markets (the diet-seeking market), product markets (the shoe market), demographic markets (the
“Millennium” youth market), and geographic markets (the Chinese market), as well as voter markets, labor markets, and
donor markets.
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A Simple Marketing System

The figure shows how sellers and buyers are connected by four flows. Sellers send goods and services and
communications such as ads and direct mail to the market; in return they receive money and information such
as customer attitudes and sales data. The inner loop shows an exchange of money for goods and services;
the outer loop shows an exchange of information.

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The New Marketing Realities

• The marketplace is dramatically different from even
10 years ago, with new marketing behaviors,
opportunities, and challenges emerging.
• The market forces that shape the relationships
among the different market entities
• The market outcomes that stem from the interplay of
these forces
• The emergence of holistic marketing as an essential
approach to succeeding in the rapidly evolving market

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The New Marketing Realities

The figure summarizes the four major market forces, three key market outcomes, and four fundamental pillars of holistic
marketing that help to capture the new marketing realities. With these concepts in place, we can identify a specific set of
tasks that make up successful marketing management and marketing leadership.
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Major Market Forces

• Technology: Massive amounts of information and data about almost
everything are now available to consumers and marketers. Technological
developments have given birth to new business models that take advantage of
the new capabilities stemming from these technologies. Even traditional
marketing activities are profoundly affected by technology.

• Globalization: The world has become a smaller place. Geographic and political
barriers have been eroded as advanced telecommunication technologies and
workflow platforms that enable all types of computers to work together
continue to create almost limitless opportunities for communication,
collaboration, and data mining. Globalization has made countries increasingly
multicultural and changes innovation and product development as companies
take ideas and lessons from one country and apply them to another.
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Major Market Forces

• Physical environment: Two particularly far-ranging changes in the physical
environment deserve special attention: climate change and changes in global
health conditions. Climate change can have a profound effect on the business
models of virtually all companies regardless of their size or the industry in
which they operate. Health conditions range from short-term illnesses that are
confined to a particular geographic area to pandemics that spread across the
globe.

• Social responsibility: The private sector is taking some responsibility for

improving living conditions, and firms all over the world have elevated the role
of corporate social responsibility. Because marketing’s effects extend to society
as a whole, marketers must consider the ethical, environmental, legal, and
social context of their activities. Social responsibility is a way to differentiate
from competitors, build consumer preference, and achieve notable sales and
profit gains. 16

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A Dramatically Changed Marketplace (1 of 5)

• The four major forces shaping today’s markets—technology,

globalization, the physical environment, and social responsibility—are
fundamentally changing the ways consumers and companies interact
with each other. Expanded information, communication, and mobility
enable customers to make better choices and share their preferences
and opinions with others around the world.
• New consumer capabilities
• Can use online resources as a powerful information and purchasing aid
• Can search, communicate, and purchase on the move
• Can tap into social media to share opinions and express loyalty

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A Dramatically Changed Marketplace (2 of 5)

• New consumer capabilities

• Can actively interact with companies
• Can reject marketing they find inappropriate or annoying
• Can extract more value from what they already own

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A Dramatically Changed Marketplace (3 of 5)

• At the same time, globalization, social responsibility,

and technology have also generated a new set of
capabilities to help companies cope and respond.
• New company capabilities
• Can use the internet as a powerful information and sales
channel, including for individually differentiated goods
• Can collect fuller and richer information about markets,
customers, prospects, and competitors
• Can reach customers quickly and efficiently via social media
and mobile marketing, sending targeted ads, coupons, and
information

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A Dramatically Changed Marketplace (4 of 5)

• New company capabilities

• Can improve purchasing, recruiting, training, and internal
and external communications
• Can improve cost efficiency

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A Dramatically Changed Marketplace (5 of 5)

• The new market forces have not only changed consumer

and company capabilities; they have also dramatically
changed the dynamics of the competition and the nature
of the competitive landscape.

• New competitive environment

• Deregulation
• Privatization
• Retail transformation
• Disintermediation
• Private labels
• Mega-brands

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What is Holistic Marketing?

• An integrated approach to manage strategy and tactics. The holistic marketing concept
views a business as a unified entity, with all its different parts working together towards
a common goal. The holistic approach seeks to create synergy across all the different
components of marketing such as advertising, public relations, sales, operations, and
customer service. It consists of the followings:
• Relationship marketing
• Integrated marketing
• Internal marketing
• Performance/Socially responsible marketing

The market value concept calls for a holistic approach to marketing that is focused
• on building relationships, rather than on generating transactions;
• on integrated marketing that is both automated and creative, rather than on manually
managed piecemeal marketing actions;
• on internal marketing that reflects a strong corporate culture rather than disengaged
employees; and
• on performance-focused marketing that is driven by science rather than intuition.
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Four broad components characterizing holistic marketing

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Relationship Marketing (1 of 3)
• Relationship marketing aims to build mutually
satisfying long-term relationships with key
constituents in order to earn and retain their business

• Increasingly, a key goal of marketing is to develop

deep, enduring relationships with people and
organizations that directly or indirectly affect the
success of the firm’s marketing activities.

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Relationship Marketing (2 of 3)
Four key constituents for relationship
marketing are
• Customers
• Employees
• Marketing partners
• Financial community

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Relationship Marketing (3 of 3)
• Marketers must create prosperity among all these constituents and
balance the returns to all key stakeholders. To develop strong relationships
with them requires understanding their capabilities and resources, needs,
goals, and desires.

• The ultimate outcome of relationship marketing is a unique company asset

called a marketing network, consisting of the company and its supporting
stakeholders—customers, employees, suppliers, distributors, retailers, and
others—with whom it has built mutually profitable business relationships.

• The operating principle is simple: build an effective network of relationships

with key stakeholders, and profits will follow.

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Integrated Marketing
• Devise marketing activities and programs that create, communicate, and deliver value
such that “the whole is greater than the sum of its parts.”

• Integrated marketing coordinates all marketing activities and marketing programs and directs them toward
creating, communicating, and delivering consistent value and a consistent message for consumers.
• Integrated marketing is a strategy for delivering a unified message across all the marketing channels your brand
uses. It provides consistency wherever customers choose to interact with a company.
• This requires that marketers design and implement each marketing activity with all other activities in mind.
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Internal Marketing
• The task of hiring, training, and motivating able employees who want to serve
customers well.
• Internal marketing is the promotion of a company's objectives, products and
services to employees within the organization. The purpose is to increase
employee engagement with the company's goals and foster brand advocacy.
• Marketing succeeds only when all departments work together to achieve
customer goals: when engineering designs the right products, finance furnishes
the right amount of funding, purchasing buys the right materials, production
makes the right products in the right time horizon, and accounting measures
profitability in the right ways.
• Such interdepartmental harmony can truly coalesce, however, only when senior
management clearly communicates a vision of how the company’s marketing
orientation and philosophy serve customers.
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Performance/Socially responsible marketing

• Financial
accountability
• Environmental impact
• Social impact

Performance marketing requires understanding the financial and nonfinancial returns to business and society
from marketing activities and programs.

It is an approach to marketing where the marketers try to attract consumers who want to support a cause or
make a positive change with their purchasing decisions. It involves promoting your corporate social
responsibility (CSR) efforts such as making donations, volunteering for a cause, maintaining ethicality, following
sustainable practices, supporting communities and like wise activities.

Patagonia is one of a small number of benefit (B) corporations in the United States that must each year explain
how their mission is benefiting both stakeholders and society, Patagonia aims to combine environmental
consciousness with maximizing shareholder returns.
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Examples of socially responsible marketing strategies include

• Recyclable packaging
• Promotions that spread awareness of societal issues and problems
• Directing portions of profits toward charitable groups or efforts
• Green branding
• Use of carbon-neutral packaging
• Encouraging customers to buy merit goods and dissuade the use of demerit
goods
• Encouraging safe behavior, such as asking people not to smoke in public
areas, reducing cigarette smoking, asking people to use seat belts etc.

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Examples of Companies adopted socially responsible marketing

strategies
• Reliance Industries Limited
• HDFC Bank Limited
• Tata Consultancy Services Limited
• Oil And Natural Gas Corporation Limited
• Infosys Limited
• ITC Limited
• Indian Oil Corporation Limited
• NTPC Limited
• Tata Steel limited
• ICICI Bank Limited

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ESG (Environmental Social and Governance)

Score

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ESG (Environmental Social and Governance)

Score..

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Defining the Role of Marketing in the Organization

• Production concept
• Product concept
• Selling concept
• Marketing concept
• Market-value concept

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Defining the Role of Marketing in the Organization..

• A company must decide what overarching philosophy will guide a company’s
marketing efforts, determine how to organize and manage the marketing
department, and, ultimately, find the best means to build a customer-centric
organization that can deliver value to company stakeholders.
• The production concept is one of the oldest concepts in business. It holds that
consumers prefer products that are widely available and inexpensive.
• The product concept proposes that consumers favor products offering the highest
quality, the best performance, or innovative features.
• The selling concept holds that consumers and businesses, if left alone, won’t buy
enough of the organization’s products.
• The marketing concept emerged in the mid-1950s as a customer-centered, sense-
and-respond philosophy. The job of marketing is not to find the right customers
for your products but to develop the right products for your customers.
• The market-value concept is based on the development, design, and
implementation of marketing programs, processes, and activities that recognize
their breadth and interdependencies. The value-based view of marketing
acknowledges that everything matters in marketing—and that a broad, integrated
perspective is often necessary. 35

Product-Oriented v s Market-Value-Oriented Definitions of a

ers u

Business
Some examples of companies that have moved from a product definition to a market-value definition
of their business.

Company Product Definition Market-Value Definition

Union Pacific Railroad We run a railroad. We move people and
goods.
Xerox We make copying We help improve office
equipment. productivity.
Hess Corporation We sell gasoline. We supply energy.
Paramount Pictures We make movies. We market entertainment.
Encyclopedia Britannica We sell encyclopedias We distribute information.
online.
Carrier We make air conditioners We provide climate control
and furnaces. in the home.
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Organizing the Marketing Department

• Functional organization
• Geographic organization
• Product or brand organization
• Market organization
• Matrix organization

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Organizing the Marketing Department

• The structure of the marketing department plays a major role in a company’s ability to
create market value. Company success is determined not only by the skills of the
individual marketers but also, and to a large degree, by the way the marketers are
organized to create a high-performing marketing team.
• In the most common form of marketing organization, functional specialists report to a
chief marketing officer who coordinates their activities.
• A company selling in a national market often organizes its sales force (and sometimes its
marketing) along geographic lines. Some companies are adding area market specialists
(regional or local marketing managers) to support sales efforts in high-volume markets.
Some companies must develop different marketing programs in different parts of the
country, because geography substantially alters their brand development activities.
• Companies producing a variety of products and brands often establish a product- or
brand-management organization. This does not replace the functional organization but
serves as another layer of management. A group product manager supervises product
category managers, who in turn supervise specific product and brand managers.
• When customers fall into different user groups with distinct buying preferences and
practices, a market-management organization is desirable.
• Companies that produce many products for many markets may adopt a matrix structure
employing both product and market managers. One of the key disadvantages of the
matrix structure though, is the potential lack of clear focus and accountability.
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Functional Organization

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Functional Organization..
• The figure shows seven specialists. Other specialists might include a
marketing planning manager, a market logistics manager, a direct
marketing manager, a social media manager, and a digital marketing
manager.
• The main advantage of a functional marketing organization is its
administrative simplicity.
• However, it can be quite a challenge for the departments to develop
smooth working relationships, which can result in inadequate
planning as the number of products and markets increases and the
functional groups vie for budget and status.
• The marketing vice president constantly weighs competing claims and
faces a difficult coordination problem.
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The Product Manager’s Interactions

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The Product Manager’s Interactions

• A product-management organization makes sense if the company’s products are
quite different or if there are more products than a functional organization can
handle.
• This form is sometimes characterized as a hub-and-spoke system. As shown in
Figure, the brand or product manager is figuratively at the center, with spokes
leading to various departments representing working relationships.
• The product-management organization lets the product manager concentrate on
developing a cost-effective marketing program and react more quickly to new
products in the marketplace; it also gives the company’s smaller brands a product
advocate.
• But it has disadvantages, too.
• Product and brand managers may lack authority to carry out their responsibilities. They often
become experts in their product area but rarely achieve functional expertise.
• Another challenge is that brand managers normally manage a brand for only a short time.
Short-term involvement leads to short-term planning and fails to build long-term strengths.
• The fragmentation of markets makes it harder to develop a national strategy. Brand
managers must please regional and local sales groups, transferring power from marketing to
sales. Another important consideration is that product and brand managers focus the
company on building market share rather than customer relationships.
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Managing the Marketing Department

• The role of the CEO and the CMO
• Relationships with other departments

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The Role of the CEO

• CEOs recognize that marketing builds strong brands
and a loyal customer base, intangible assets that
contribute heavily to the value of a firm.
• Convince senior management of the importance of
being customer focused
• Hire strong marketing talent
• Facilitate the creation of strong in-house marketing
training programs
• Appoint a chief marketing officer

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The Role of the CMO

• The CMO leads all marketing functions in the
organization, including product development, brand
management, communication, market research and data
analytics, sales, promotion, distribution management,
pricing, and customer service.
• Act as the visionary for the future of the company
• Build adaptive marketing capabilities
• Win the war for marketing talent
• Tighten the alignment with sales
• Take accountability for returns on marketing spending
• Infuse a customer perspective in business decisions
affecting any customer touch point

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Relationships with Other Departments

The firm’s success depends not only on how well each department
performs its work, but also on how well the company coordinates
departmental activities to conduct core business processes. Under
the marketing concept, all departments need to “think customer”
and work together to satisfy customer needs and expectations.
• Marketers must work closely with:
• customer insights and data analytics teams
• different communication agencies
• channel partners

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Building a Customer-Oriented Organization

• Create long-term customer value
• Requires managers at every level to be personally engaged in understanding,
meeting, and serving customers
• The proliferation of products, services, and brands; increased consumer
knowledge about market offerings; and consumers’ ability to influence
public opinion about companies and their offerings—all have underscored
the importance of building a customer-oriented organization.
• With the rise of digital technologies, increasingly informed consumers
expect companies to do more than connect with, satisfy, and even delight
them. They expect companies to listen and respond to them.

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Traditional Organization versus Modern Customer-Oriented Company Organization

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Traditional Organization versus Modern Customer-Oriented Company Organization..

• Managers who believe the customer is the company’s only true “profit
center” consider the traditional organization chart —a pyramid structure
with the president at the top, management in the middle, and frontline
people and customers at the bottom—to be obsolete.
• Successful marketing companies transform the traditional organization-
hierarchy chart to look like the Modern Customer oriented Organization
chart.
• A company’s top priority are customers; next in importance are the
frontline people who meet, serve, and satisfy these customers; then come
service managers, whose job is to support the frontline people so they can
serve customers well; and finally, there is the top management, whose job
is to hire and support good service managers.

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Becoming a Market-Driven Company

• Transforming into a true market-driven company requires (among other actions)
developing a company-wide passion for customers,
• organizing around customer segments instead of products, and
• understanding customers through qualitative and quantitative research.
• Many companies realize they’re not yet really market and customer driven; rather, they
are product and sales driven.
• Although it’s necessary to be customer oriented, it’s not enough. The organization must
also be creative.
• Companies today copy one another’s advantages and strategies with increasing speed,
making differentiation harder to achieve and lowering margins as firms become more
alike.
• The best answer to this dilemma is to build capability in strategic innovation and
imagination. This capability comes from assembling tools, processes, skills, and
measures that let the firm generate more and better new ideas than its competitors.
• To encourage such capability, companies should strive to put together inspiring work
spaces that help stimulate new ideas and foster imagination.
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Characteristics of Customer-Centric Organizations

Low Customer-Centricity High Customer-Centricity

Product driven Market driven
Mass market focused Customer focused
Process oriented Outcome oriented
Reacting to competitors Making competitors irrelevant
Price driven Value driven
Hierarchical organization Teamwork

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Summing up (1 of 5)
• 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 company, its
customers, and its collaborators.
• 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.
• Companies aim to create value by marketing goods, services, events,
experiences, persons, places, properties, organizations, information, and
ideas. They also operate in five basic markets: resource markets,
manufacturer markets, consumer markets, intermediary markets, and
government markets.

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Summing up (2 of 5)
• Today's marketplace is fundamentally different as a result of major
market forces. In particular, technology, globalization, and social
responsibility have created new opportunities and challenges and have
significantly changed marketing management. Companies seek the
right balance of tried-and-true methods and breakthrough new
approaches to achieve marketing excellence.
• Four major market forces-technology, globalization, the physical
environment, and social responsibility— have forged new consumer
and company capabilities and have dramatically altered the
competitive landscape. These changes require companies to re-
evaluate their current business models and adapt the way they create
market value to the new environment.

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Summing up (3 of 5)
• The holistic marketing concept is based on the development, design,
and implementation of marketing programs, processes, and activities
that are based on breadth and interdependencies. Holistic marketing
recognizes that everything matters in marketing and that a broad,
integrated perspective is often necessary. Four components of holistic
marketing are relationship marketing, integrated marketing, internal
marketing, and performance marketing.
• There are five competing concepts under which organizations can
choose to conduct their business: the production concept, the product
concept, the selling concept, the marketing concept, and the market-
value concept. The more sophisticated a company's understanding of
the market, the more likely that it will adopt the market-value concept
as an overarching philosophy of doing business.

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Summing up (4 of 5)
• Companies use different approaches to organize the marketing
department: functional, geographic, product/ brand, market, and
a matrix structure. The choice of a particular approach depends
on the market in which a company operates, its organizational
structure, and its strategic goals.
• Marketing is not conducted by the marketing department alone.
To create a strong marketing organization, marketers must think
like executives in other departments, and executives in other
departments must think more like marketers.

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Summing up (5 of 5)
• A customer-centric company must be market driven rather than
product driven, it must aim to cater to individual customer needs
rather than mass market needs, and it must strive to make the
competition irrelevant rather than merely reacting to
competitors' actions. To succeed, a company should focus on
delivering superior value to target customers in a way that
benefits the company and its collaborators.

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Thank you

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