Marketing Management

Chapter 1

Marketing is about identifying and meeting human and social needs. One of the shortest good definitions of marketing
is “meeting needs profitably.”

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.

What is Marketed?

1. Goods 7. Properties
2. Services 8. Organization
3. Events 9. Information
4. Experiences 10. Ideaas
5. Persons
6. Places

Who Markets?
MARKETERS AND PROSPECTS A marketer is someone who seeks a response—attention, a purchase, a vote, a donation—
from another party, called the prospect. If two parties are seeking to sell something to each other, we call them both
marketers.

Eight Demands States are possible:

1. Negative demand—Consumers dislike the product and may even pay to avoid it.
2. Nonexistent demand—Consumers may be unaware of or uninterested in the product.
3. Latent demand—Consumers may share a strong need that cannot be satisfied by an existing product.
4. Declining demand—Consumers begin to buy the product less frequently or not at all.
5. Irregular demand—Consumer purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis.
6. Full demand—Consumers are adequately buying all products put into the marketplace.
7. Overfull demand—More consumers would like to buy the product than can be satisfied.
8. Unwholesome demand—Consumers may be attracted to products that have undesirable social consequences.

Market - was a physical place where buyers and sellers gathered to buy and sell goods.

KEY CUSTOMER MARKETS Consider the following key customer markets: consumer,
business, global, and nonprofit.

Consumer Markets Companies selling mass consumer goods and services such as juices, cosmetics, athletic shoes, and
air travel spend a great deal of time establishing a strong brand image by developing a superior product and packaging,
ensuring its availability, and backing it with engaging communications and reliable service.

Business Markets Companies selling business goods and services often face well-informed professional buyers skilled at
evaluating competitive offerings. Business buyers buy goods to make or resell a product to others at a profit. Business
marketers must demonstrate how their products will help achieve higher revenue or lower costs. Advertising can play a
role, but the sales force, the price, and the company’s reputation may play a greater one.

Global Markets Companies in the global marketplace must decide which countries to enter;\ how to enter each (as an
exporter, licenser, joint venture partner, contract manufacturer, or solo manufacturer); how to adapt product and
service features to each country; how to price products in different countries; and how to design communications for
different cultures. They face different requirements for buying and disposing of property; cultural, language, legal and
political differences; and currency fluctuations. Yet, the payoff can be huge.
Nonprofit and Governmental Markets Companies selling to nonprofit organizations with limited purchasing power such
as churches, universities, charitable organizations, and government agencies need to price carefully. Lower selling prices
affect the features and quality the seller can build into the offering. Much government purchasing calls for bids, and
buyers often focus on practical solutions and favor the lowest bid in the absence of extenuating factors.

Core Marketing Concepts

Needs, Wants, and Demands

Needs are the basic human requirements such as for air, food, water, clothing, and shelter. Humans also have strong
needs for recreation, education, and entertainment. These needs become wants when they are directed to specific
objects that might satisfy the need.

Demands are wants for specific products backed by an ability to pay.

Target Markets, Positioning, and Segmentation

Not everyone likes the same cereal, restaurant, college, or movie. Therefore, marketers start by dividing the market into
segments. They identify and profile distinct groups of buyers who might prefer or require varying product and service
mixes by examining demographic, psychographic, and behavioral differences among buyers. After identifying market
segments, the marketer decides which present the greatest opportunities— which are its target markets. For each, the
firm develops a market offering that it positions in the minds of the target buyers as delivering some central benefit(s).

Offerings and Brands

Companies address customer needs by putting forth a value proposition, a set of benefits that satisfy those needs. The
intangible value proposition is made physical by an offering, which can be a combination of products, services,
information, and experiences. A brand is an offering from a known source. A brand name such as McDonald’s carries
many associations in people’s minds that make up its image: hamburgers, cleanliness, convenience, courteous service,
and golden arches. All companies strive to build a brand image with as many strong, favorable, and unique brand
associations as possible.

Value and Satisfaction

The buyer chooses the offerings he or she perceives to deliver the most value, the sum of the tangible and intangible
benefits and costs to her. Value, a central marketing concept, is primarily a combination of quality, service, and price
(qsp), called the customer value triad. Value perceptions increase with quality and service but decrease with price. We
can think of marketing as the identification, creation, communication, delivery, and monitoring of customer value.
Satisfaction reflects a person’s judgment of a product’s perceived performance in relationship to expectations. If the
performance falls short of expectations, the customer is disappointed. If it matches expectations, the customer is
satisfied. If it exceeds them, the customer is delighted.

Marketing Channels

To reach a target market, the marketer uses three kinds of marketing channels. Communication channels deliver and
receive messages from target buyers and include newspapers, magazines, radio, television, mail, telephone, billboards,
posters, fliers, CDs, audiotapes, and the Internet. Beyond these, firms communicate through the look of their retail
stores and Web sites and other media. Marketers are increasingly adding dialogue channels such as e-mail, blogs, and
toll-free numbers to familiar monologue channels such as ads. The marketer uses distribution channels to display, sell,
or deliver the physical product or service(s) to the buyer or user. These channels may be direct via the Internet, mail, or
mobile phone or telephone, or indirect with distributors, wholesalers, retailers, and agents as intermediaries. To carry
out transactions with potential buyers, the marketer also uses service channels that include warehouses, transportation
companies, banks, and insurance companies. Marketers clearly face a design challenge in choosing the best mix of
communication, distribution, and service channels for their offerings.

Supply Chain

The supply chain is a longer channel stretching from raw materials to components to finished products carried to final
buyers

Competition
Competition includes all the actual and potential rival offerings and substitutes a buyer might consider.

Marketing Environment

The marketing environment consists of the task environment and the broad environment. The task environment
includes the actors engaged in producing, distributing, and promoting the offering.
These are the company, suppliers, distributors, dealers, and target customers. In the supplier group are material
suppliers and service suppliers, such as marketing research agencies, advertising agencies, banking and insurance
companies, transportation companies, and telecommunications companies. Distributors and dealers include agents,
brokers, manufacturer representatives, and others who facilitate finding and selling to customers.

The broad environment consists of six components: demographic environment, economic environment, social-cultural
environment, natural environment, technological environment, and political- legal environment. Marketers must pay
close attention to the trends and developments in these and adjust their marketing strategies as needed. New
opportunities are constantly emerging that await the right marketing savvy and ingenuity.

Relationship marketing aims to build mutually satisfying long-term relationships with key constituents in order to earn
and retain their business. 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.

Integrated marketing occurs when the marketer devises marketing activities and assembles marketing programs to
create, communicate, and deliver value for consumers such that “the whole is greater than the sum of its parts.” Two
key themes are that (1) many different marketing activities can create, communicate, and deliver value and (2)
marketers should design and implement any one marketing activity with all other activities in mind. All company
communications also must be integrated. Using an integrated communication strategy means choosing communication
options that reinforce and complement each other. A marketer might selectively employ television, radio, and print
advertising, public relations and events, and PR and Web site communications so each contributes on its own as well as
improving the effectiveness of the others. Each must also deliver a consistent brand message at every contact.

Internal marketing, an element of holistic marketing, is the task of hiring, training, and motivating able employees who
want to serve customers well. It ensures that everyone in the organization embraces appropriate marketing principles,
especially senior management. Smart marketers recognize that marketing activities within the company can be as
important—or even more important— than those directed outside the company. It makes no sense to promise excellent
service before the company’s staff is ready to provide it.
Performance marketing requires understanding the financial and nonfinancial returns to business\ and society from
marketing activities and programs. Top marketers are increasingly going beyond sales revenue to examine the marketing
scorecard and interpret what is happening to market share, customer loss rate, customer satisfaction, product quality,
and other measures. They are also considering the legal, ethical, social, and environmental effects of marketing activities
and programs.

Updating The Four Ps

Chapter 2

value chain Is a tool for identifying ways to create more customer value. According to this model, every firm is a
synthesis of activities performed to design, produce, market, deliver, and support its product.

core competency has three characteristics: (1) It is a source of competitive advantage and makes a significant
contribution to perceived customer benefits. (2) It has applications in a wide variety of markets. (3) It is difficult for
competitors to imitate. Competitive advantage also accrues to companies that possess distinctive capabilities or
excellence in broader business processes. Competitive advantage ultimately derives from how well the company has
fitted its core competencies and distinctive capabilities into tightly interlocking “activity systems.”

The Central Role of Strategic Planning

To ensure they select and execute the right activities, marketers must give priority to strategic planning in three key
areas: (1) managing a company’s businesses as an investment portfolio, (2) assessing each business’s strength by
considering the market’s growth rate and the company’s position and fit in that market, and (3) establishing a strategy.
The company must develop a game plan for achieving each business’s long-run objectives.

marketing plan is the central instrument for directing and coordinating the marketing effort. It operates at two levels:
strategic and tactical.

strategic marketing plan lays out the target markets and the firm’s value proposition, based on an analysis of the best
market opportunities.

tactical marketing plan specifies the marketing tactics, including product features, promotion, merchandising, pricing,
sales channels, and service. The complete planning, implementation, and control cycle of strategic planning

Organizations develop mission statements to share with managers, employees, and (in many cases) customers. A clear,
thoughtful mission statement provides a shared sense of purpose, direction, and opportunity. Mission statements are at
their best when they reflect a vision, an almost “impossible dream” that provides direction for the next 10 to 20 years.

target market definition tends to focus on selling a product or service to a current market.
SWOT Analysis
EXTERNAL ENVIRONMENT (OPPORTUNITY AND THREAT) ANALYSIS

A business unit must monitor key macroenvironment forces and significant microenvironment factors that affect its
ability to earn profits.

Marketing opportunity is an area of buyer need and interest that a company has a high probability of profitably
satisfying. There are three main sources of market opportunities. The first is to offer something that is in short supply