Managing Profitable Customer Relationship

By
M.S.Hussain
AAKCBA
Managing Profitable Customer Relationship
Contents Page
Marketing 3
Market 4
Marketing Management 6
Marketing Tasks 11
Marketing Philosophies 13
Marketing Mix 19
Marketing Environment 24
Marketing Strategy 26
Marketing Interface 29
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MARKETING
Marketing is an art of selling products
The aim of marketing is to know and understand the customer’s needs so well that the product or service
fits him and sells itself.
The term marketing has changed and evolved over a period of time, today marketing is based around
providing continual benefits to the customer, these benefits will be provided and a transactional exchange
will take place.
Marketing is a social and managerial process by which individuals and groups obtain what they need and
want through creating, offering and exchanging products of value with others.
Philip Kotler defines marketing as 'satisfying needs and wants through an exchange process'
Within this exchange transaction customers will only exchange what they value (money) if they feel that
their needs are being fully satisfied, clearly the greater the benefit provided the higher transactional value
an organization can charge.
Marketing is used to create the customer, to keep the customer and to satisfy the customer. With the
customer as the focus of its activities, it can be concluded that Marketing is one of the premier
components of Business Management
Marketing is not about providing products or services it is essentially about providing changing benefits to
the changing needs and demands of the customer
Thus Marketing means
• Understanding and responding to customer needs,
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• Serving them in such a way that it helps the selling organization fulfill its objective of profit
maximization.
MARKET
1. Collection of aggregation of all buyers is a Market.
Traditionally a ‘MARKET’ is a physical place where sellers and buyers gathered to sell and buy goods.
Economists describe a market as a collection of buyers and sellers who transact over a particular product
or product class.
A market is an environment that allows buyers and sellers to trade or exchange goods, services, and
information.
There are certain types of markets. The following are the key customer markets
• Consumer Market : Companies selling mass consumer goods and services

such as soft drinks, cosmetics, air travel, shoes, etc. spend a great deal of time trying to
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establish a superior brand image. Much of the brand’s strength depends upon
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-trained and well-informed professional buyer’s who are skilled in evaluating
competitive offerings. Business buyers buy goods in order to make or resell a product
to others at profit. Business markets must demonstrate how their products will help
these buyers achieve higher revenue or lower costs. Advertising can play a role but a
stronger role may be played by the sales force, price, and the company’s reputation for
reliability and quality.
• Global Markets: Companies selling goods and services in global market-place

face additional decisions and challenges. They must decide which countries to enter;
how to enter each country; how to adapt their product and service features to each
country: how to price their productsin different countries; and how to adapt their
communications to fit different cultures. These decisions must be made in the face of
different requirements for buying, negotiating, owning, and disposing property;
different culture, language, and legal and political systems; and a currency that might
fluctuate in value.
• Non-Profit and Governmental Markets: Companies selling their goods to non-

profit organizations such as churches, universities, charitable organizations or
government agencies need to price carefully because these organizations, or chasing
power. Lower prices effect the features and quality that the seller can build into the
offering. Much government purchasing calls for bids, with the lowest bid being
favored, in the absence of extenuating factors.
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MARKETING MANAGEMENT
Marketing Management is an art and science of choosing target markets and getting, keeping,
growing customers through creating, delivering, and communicating superior customer value.
The American Marketing Association define the marketing as:
“Marketing is the performance of business activities that directs the

flow of goods and services from producer to consumer or user”
There are some more definition of marketing. The better definitions are focused upon customer orientation
and satisfaction of customer needs.
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“A human activity directed at satisfying needs and wants through exchange processes.”-----Kotler
“Marketing is the management process that identifies, anticipates and satisfies customer requirements
profitably” ----- The Chartered Institute of Marketing (CIM).
The CIM definition looks not only at identifying customer needs, but also satisfying them (short-term) and
anticipating them in the future (long-term retention).
“The right product, in the right place, at the right time, at the right price” ---- Adcock.
Marketing management is a business discipline which is focused on the practical application

of marketing techniques and the management of a firm's marketing resources and activities. Marketing
managers are often responsible for influencing the level, timing, and composition of customer demand
accepted definition of the term.
Marketing management employs various tools from economics and competitive strategy to
analyze the industry context in which the firm operates.
Evolution of Marketing Role:

The history of marketing thought deals with the evolution of theories in the field of marketing,
from the ancient world to contemporary days. Marketing historians ] agree that the discipline branched out
of applied economics at the turn of the twentieth century, though some argue that scholars in the ancient
and medieval ages had already studied marketing ideas.
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Earlier Marketing was considered as an equally considered function as other functions like
finance, production and personnel. Later on managers started to realize that the marketing is much more
important function then the others. Then it became the major function of management. Afterwards the
management has got to understand that consumer is the controlling function of management and the
marketing is the most important function. Now is the trend that all managements feel that the customer is
the controlling factor and the marketing as the interactive factor of management whereas the remaining
functions of production, finance and personnel are supporting factors.
The Core Concepts of Marketing

 Need/Want/Demand
 Market
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 Product
 Satisfaction/Delight/Value
 Marketing/Selling
Difference between needs, wants and demands
Needs
Needs are the basic human requirements. People need food, water, clothing, and shelter to survive.
Wants
The needs become wants when they are directed to a particular object which will satisfy the need. The
form taken by a human need as shaped by culture and individual personality is a want.
A person needs food but wants a Hamburg, soft drink, etc.
Demands
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Demands are wants for specific product backed by an ability to pay. Human wants that are backed by
buying power are demands.
Marketers create needs. Marketers get people to buy things they don’t want. Marketers might
promote the idea that a Mercedes would satisfy their need for social status. They might do not, however
create the need for social status.
Understanding customer needs and wants is always so easy or simple. Some customers have
needs of which they are not fully conscious, or they articulate these needs, or they use words that require
some interpretation.
Responding only to stated needs may shortage the customer. Many consumers do not know what
they want in a product. In the past responding to customer needs meant studying customer needs and
making a product that suit these needs on the average, but some of today’s companies instead respond to
each customer’s individual needs. This is a change from a “make-and-sell” philosophy to a philosophy of
“sense and respond”.
Product
A product is anything that can be offered to a market that might satisfy a want or need.
Market
The concept of a market is any structure that allows buyers and sellers to exchange any type of goods,
services and information. The exchange of goods or services for money is a transaction. Market
participants consist of all the buyers and sellers of a good who influence its price.
Value and Satisfaction/Delight

The offering will be successful if it delivers value and satisfaction to the target buyer. The buyer chose
between different offerings on the basis of which is perceived to deliver the most value. Value reflects
perceived tangible and intangible benefits and costs to customers. Value can be seen as primarily a
combination of quality, service and price. Value increases with quality and service and decreases with
price, although other factors can also play an important role.
Value is central marketing concept. Marketing can be seen as identification, creation,

communication, delivery and monitoring customer’s value. Satisfaction reflects a person’s comparative
judgments resulting from product’s perceived performance in relation to his or her expectations. If the
performance falls short of expectation, the customer is dissatisfied and disappointed. If the performance
matches the expectations, the customer is satisfied. If the performance exceeds the expectation of the
customer he or she is highly satisfied or delighted.
Marketing
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Marketing is a system of business activities designed to plan, price, promote and distribute want satisfying
goods and services to target markets, in order to achieve organizational objectives.
Selling
When a company makes a product and then tries to persuade customers to buy it, that’s selling.
Difference between selling and marketing
Selling Marketing
• Emphasis is on the product. • Emphasis is on customers’ wants.

• Company first makes the product and then • Company first determines customers’
figures out how to sell it. wants and then figures out how to make
• Management is sales volume oriented. and delivers a product to satisfy those
• Planning is short run oriented, in terms of wants.
today’s products and markets. • Management is profit oriented
• Needs of sellers are stressed. • Planning is long run oriented, in terms of
new products, tomorrow’s market, and
future growth.
• Wants of buyers are stressed.
Marketing Management Tasks
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The core concepts of marketing and others provide the input for a set of tasks that make up
successful marketing management. These are the few of such tasks:
Developing Marketing Strategies and Plans
The first task is to identify its potential long-run opportunities given its market experience and
core competencies. It must develop concrete marketing plans that specify the marketing strategy and
tactics going forward.
Capturing Market Insights
To understand what is happening inside and outside the company. Every company needs a reliable
marketing information system which will closely monitor its marketing environment. Microenvironment
consists of all the factors that affect the company’s ability to produce and sell the product i.e. suppliers,
marketing intermediaries, customers and competitors. Its macroenvironment consists of demographic,
economic, physical, technological, political-legal, and social-cultural forces that affects the sales and
profits.
Companies also need marketing research system. Marketing research is an indispensable tool for
assessing buyer wants and behavior and actual and potential market size. An important part of gathering
environmental information includes measuring market potential and forecasting future demand. To
transform marketing strategy into marketing program, marketing managers must make basic decision on
marketing expenditures, marketing activities and marketing allocation.
Connecting With Customers
Company must consider how to best create value for its chosen target markets and develop strong,
profitable, long-term relationship with customers. For that first company have to understand the customer
market. Modern marketing practices calls for dividing the market into major market segments, evaluating
each segment, and targeting those market segments that the company best serve.
Building Strong Brands
Companies have to understand the strengths and weakness of their brand with the customers.
Product’s strategy will need modification at the different stages in product life cycle: introduction, growth,
maturity and decline. Furthermore strategies depend upon whether the firm is a market leader, challenger,
follower or nicher. It must always pay close attention to its competitors, anticipating its competitor’s
moves and knowing how to react quickly and decisively. It may want to initiate some surprise moves, in
which case it needs to anticipate how its competitors will respond.
Shaping the Market Offerings
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At the heart of marketing program is the product, the firm’s tangible offering to the market, which
includes the product quality, design, features and packaging. As part of its product offering, it may
provide various services, such as leasing, delivery, repair and training. Such support services provide a
competitive advantage in the global marketplace.
A critical marketing decision relates to price. Every firm should be commensurate with the offer’s
perceived value; otherwise buyers will turn to competitor’s products.
Delivering Value
Firm must also determine how to properly deliver the value embodied with these products and
services to target the market. Channel activities include the various activities the company undertakes to
make the product accessible and available to target customers. Firm must understand various types of
retailers, wholesalers, and physical distribution firms and how they make their decisions.
Communicating Value
Marketing communications activities are the means by which firms attempt to inform, persuade
and remind customers directly or indirectly about the brands they sell. So, the firm has to develop an
integrated marketing communication program that maximizes the individuals and collective contribution
of all communication activities. The firm has to perform mass communication programs consisting of
advertising, sales promotion, events and public relations. It also has to setup more personal
communications in the form of direct and interactive marketing.
Creating Long-term Growth
Firm must take a long-term view of its products and brands and how its profits should be grown.
Based on its product positioning, it must initiate new-product development, testing, and launching. The
strategy also will have to take into account changing global opportunities and challenges.
Marketing Philosophies
Most people think of a marketing manager as someone who finds enough customers for the
company’s current output. But this view is too limited. Every organization has a desired level of demand
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for its products. At any point in time, there may be no demand, adequate demand, irregular demand, or too
much demand. Marketing managers can be concerned not only with finding and increasing demand but
also with changing or even reducing it.
We define marketing management as the analysis, planning, implementation, and control of

programs designed to create, build, and maintain beneficial exchanges with target buyers for the purpose
of achieving organizational objectives
There are five alternative concepts under which organizations conduct their marketing activities:
• The Production Concept,
• The Product Concept,
• The Selling Concept,
• The Marketing Concept, and
• The Societal Marketing Concept
The Production Concept:
The production concept holds that consumers will favor products that are available and highly
affordable and that management should therefore focus on improving production and distribution
efficiency. This production concept is one of the oldest philosophies guiding sellers. The production
concept is a useful philosophy in two types of situations.
• The first occurs when the demand for a product exceeds the supply. Here, management should
look for ways to increase production.
• The second situation occurs when the product’s cost is too high and improved productivity is
needed to bring it gown.
For example, Henry Ford’s whole philosophy was to perfect the production of the Model T so that
its cost could be reduced and more people could afford it. He joked about offering people a car of any
color as long as it was black. Today, Texas Instruments (TI) follows this philosophy of increased
production and lower costs in order to bring down prices. It won a major share of the American hand-
calculator market with this philosophy. But when TI used the same strategy in the digital watch market, it
failed. Although they were priced low, customers did not find TI’s watches very attractive. In its drive to
bring down prices, TI lost sight of something else that its customers wanted – namely, attractive,
affordable digital watches.
Another major concept guiding sellers, the product concept holds that consumers will favor
products that offer the most quality, performance, and features, and that an organization should thus
devote energy to making continuous product improvements. Some manufactures believe that if they can
build a better mousetrap, the world will beat a path to their door. But they are often rudely shocked.
Buyers may well be looking for a solution to a mouse problem, but not necessarily for a better mousetrap.
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The solution might be a chemical spray, an exterminating service, or something that works better than a
mousetrap. Furthermore, a better mousetrap will not sell unless the manufacturer designs, packages, and
prices it attractively, places it in convenient distribution channels, brings it to the attention of people who
need it, and convinces them that it is a better product.
The Product Concept:
The product concept can also lead to “ marketing myopia”. For instance, railroad management
once thought that users wanted trains rather than transportation and overlooked the growing challenge of
airlines, buses, trucks, and automobiles. Many colleges have assumed that high school graduates want a
liberal arts education and have thus overlooked the increasing challenge of vocational schools.
Many organizations follow the selling concept, which holds that consumers will not buy enough
of the organization’s products unless it undertakes a large selling and promotion effort. The concept is
typically practiced with unsought goods – those that buyers do not normally think of buying (say,
encyclopedias and funeral plots). These industries must be good at tracking down prospects and selling
them on product benefits.
The Selling Concept:
The selling concept is also practiced in the nonprofit area. A political party, for example, will
vigorously sell its candidate to voters as a fantastic person for a job. The candidate works in voting
precincts from dawn to dusk, shaking hands, kissing babies, meeting donors, making speeches. Much
money is spent on radio and television advertising, posters, and mailings. Candidate flaws are hidden from
the public because the aim is to get the sale, not worry about consumer satisfaction afterward.
The marketing concept holds that achieving organization goals depends on determining the needs
and wants of target markets and delivering the desired satisfactions more effectively and efficiently than
competitors. Surprisingly, this concept is a relatively recent business philosophy. It emerged only during
the 1950-s. the marketing concept has been stated in such colorful ways as “Find a need and fill it” (Kaiser
Sand & Gravel); “We do it like you’d do it” (Burger King); and “We’re not satisfied until you are” (GE).
J.C. Penney’s motto also summarizes the marketing concept: “To do all in our power to pack the
customer’s dollar full of value, quality, and satisfaction”.
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The Marketing Concept:
The marketing concept views the consumer as the focal point of all marketing activities.
Organizations that practice the marketing concept study the consumer to determine consumer’s needs and
wants and then organize and integrate all activities within the firm toward helping the consumer fulfill
these needs and wants while simultaneously achieving organizational goals. There are three pillars to the
marketing concept: (1) consumer orientation, (2) integrated or total company effort, and (3) achievement
of organization goals.
The consumer orientation dimension of the marketing concept argues that a firm can be more
successful if it determines what the consumer needs and wants before it decides what product to produce
or/and sell.
To successfully practice the principle of consumer orientation firms need to regularly conduct
marketing research. Marketing research is the systematic collection, recording, and analyzing of data that
deal with the marketing of goods and services. The tools of marketing research allow the firm to assess
consumers’ needs-wants.
Regardless of how much marketing research is conducted, no organization can be certain of

consumers’ wants and needs. This is especially true with new product development or anticipatory
manufacturing. For instance, Firestone Tire Company must produce snow tires in the summer for the
coming fall and winter season. No matter how much research Firestone conducts it will still face some
uncertainty about the weather and therefore may overproduce or under produce snow fires for the coming
season. Consequently, the role of good executive judgment in marketing decision-making cannot be
ignored. Since marketing is not a precise science, good subjective judgment resulting from years of
“hands on” experience is also a key to successfully implementing the marketing concept.
A second pillar of the marketing concept is the principle of integrated effort, in which departments
within the organization work together toward the common goal of satisfying the customer. Integrated
effort is a systems point of view, in which all departments recognize they are interdependent parts of an
organization. Because they are interdependent, they must cooperate to enable the firm to achieve its
objectives. Cooperation is often difficult because one department’s goals may conflict with those of
another department and with the organization’s overall objectives.
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Several types of conflicts can develop between departments within an organization. One type is
the inherent conflict between low unit production costs and high consumer satisfaction. For instance, if
Sony were to standardize all its television production in a single style than it could achieve significantly
lower costs per television produced. However, this would hurt Sony’s marketing efforts because most
consumers want variety and selection when purchasing a new television.
Organizational goals. The final pillar of the marketing concept state that the organization should
engage in exchanges based on their potential for helping the organization achieve its goals. Organizations
don’t participate without expecting something in return, and what they receive should help them achieve
their objectives.
The Societal Marketing Concept:
The societal marketing concept holds that the organization should determine the needs, wants, and
interests pf target markets. It should then deliver satisfaction more effectively than competitors in a way
that maintains or improves the consumer’s and the society’s well-being. The societal marketing concept is
the newest of the five marketing management philosophies.
The societal marketing concept questions whether the pure marketing concept is adequate in an
age of environmental problems, resource shortages, rapid population growth, worldwide inflation, and
neglected social services. It asks if the firm that senses, serves, and satisfies individual wants is always
doing what is best for consumers and society in the long run. According to the societal marketing concept,
the pure marketing concept overlooks possible conflicts between short-run consumer wants and long-run
consumer welfare.
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The societal marketing concept calls upon marketers to balance three considerations in setting
their marketing policies: company profits, consumer wants, and society’s interests. Originally, most
companies based their marketing decisions largely on short-run company profit. Eventually, they began to
recognize the long-run importance of satisfying consumer wants, and the marketing concept emerged.
Now many companies are beginning to think of society’s interests when making their marketing
decisions. Many of them have made large sales profit gains by practicing the societal marketing concept.
Societal marketing has only one meaning, which is the consideration of the wider social aspects of
marketing a particular product to a particular group. It is therefore an aspect of ethical marketing.
Societal Marketing Concept of various companies
COCA-COLA
Coca-cola is a soft drink company started early in the 90’s in USA. After gaining a good market
value in the world the company looked out for promoting large people towards their products. As a result
they formulated an awareness program in the African countries about the HIV awareness
 In the 2001 the Coca-Cola African foundations was formed to reduce the impact of HIV –
AIDS on coca-cola 60000 employees and 40 independent bottlers in Africa. At present, 100
percent of the coca-cola’s independent bottling companies in 54 African countries are enrolled in
the foundations programs.
 All their employees and the employee’s families are eligible to receive benefits, including
access to antiretroviral drugs, testing, counseling, prevention, and treatment. The foundations
outreach also extends beyond employees and into country.
 It focuses its efforts on three factors which Coca-Cola operates: healthcare, education, and
the environment. The many projects are supported by the foundation cost millions of dollars each
year, but coca-cola offers more than just funding. By using its distribution network, one of the
most extensive in Africa, coca-cola can transport vital materials to the remote part of the
continent.
 It reach areas of Africa which the AIDS/HIV workers have not previously had easy access
and thereby ensure that people in those areas can obtain information about the prevention and
treatment of HIV/AIDS. Even Coca-Cola’s marketing expertise is being used to raise awareness
of key issues such as HIV prevention. By leveraging its corporate assets, Coca-Cola has made
contribution to all the African communities.
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McDonalds
In April 2008, McDonald’s announced that 11 of its Sheffield restaurants have been using a biomass trial
that had cut its waste and carbon footprint by half in the area. In this trial, waste from the restaurant were
collected by Veolia Environmental Services and used to produce energy at a power plant. McDonald’s
plan to expand this project; however the lack of biomass power plants in the US will prevent this plan
from becoming national standard anytime soon.
 In addition in Europe, McDonald’s has been recycling vegetable grease

by converting it to fuel for their diesel trucks.
 The US Environmental Protection Agency has recognized McDonald’s

continuous effort to reduce solid waste by designing more efficient packaging and
by promoting the use of recycled-content materials. McDonald’s report that they
are committed towards environmental leadership by effectively managing and
reusing energy and by addressing water management issues within the restaurant.
 When McDonald’s received criticism for its environmental policies in the

1970’s it began to make substantial progress towards source reductions efforts.
For instance, an “average meal” in the 1970’s – a big Mac, fries, and a drink –
required 46 grams of packaging; today it requires only 25 grams, allowing a 46
percent reduction. In addition, McDonald’s eliminated the need for intermediate
containers for cola by having a delivery system that pumps syrup directly from
delivery truck into storage containers, saving two million pounds of packaging
annually. Overall weight reductions in packaging and products, as well as the
increased usage of bulk packaging ultimately by 24 million pounds annually.
 They have introduced products which are useful for the societal
environment. As they found the customers are more hygiene concerned and diet
conscious they started to do research and development and they produced low fat
and cholesterol content.
 When it opened in Hong Kong in 1975, McDonald’s was the first

restaurant to consistently offer clean restrooms, driving customers to demand the
same of other restaurants and institutions.
Marketing Mix
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The marketing mix and the ‘4 Ps of marketing’ are often used as synonyms for each other. In
fact, they are not necessarily the same thing."Marketing mix" is a general phrase used to describe the
different kinds of choices organizations have to make in the whole process of bringing a product or
service to market. The 4 Ps is one way - probably the best-known way - of defining the marketing mix,
and was first expressed in 1960 by E Jerome McCarthy.
The 4Ps are:
• Product (or Service)
• Place
• Price
• Promotion
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Marketing mix is an imperative concept in modern marketing and academically it is referred to as

the set of controllable tools that the firm blends to produce the response it wants in the target market, so it
consists of everything the firm can do to influence the demand for its product. It is important to realise that
marketing mix strategy of any company can have one major function, that is, strategic communication of
the organisation with its customers. It was further argued that marketing mix provides multiple paths as
such communication can be achieved either in spoken form and written communications (advertising,
selling, etc.) or in more symbolic forms of communication (the image conveyed in the quality of the
product, its price and the type of distribution outlet chosen). However, the key element is that the main
aspects of marketing mix that will be discussed below "should not be seen as individual entities, but as a
set of interrelated entities which have to be set in conjunction with one another".
Main Aspects of Marketing Mix
The easiest way to understand the main aspects of marketing is through its more famous synonym
of "4Ps of Marketing". The classification of four Ps of marketing was first introduced and suggested by
McCarthy (1960), and includes marketing strategies of product, price, placement and promotion.
• Product
In simpler terms, product includes all features and combination of goods and related services that
a company offers to its customers. So the Airbus product includes its body parts such as the engine, nut
bolts, seats, etc along with its after-sales services and all are included in the product development strategy
of the Airbus. However, a serious criticism can be raised here in terms of how marketing mix analysis will
cater for companies such as ABN Amro Bank, NatWest Bank, British Airways and FedEx Corporation as
they don't possess tangible products. It was argued that is it feasible to omit service-oriented companies
with the logic that the term "services" does not start with a "P", however, it was asserted that these
companies can use the terminology of "service products" under marketing mix strategy making.
Lazer (1971) argued that product is the most important aspect of marketing mix for two main
reasons.
• First, for manufacturers, products are the market expression of the company's productive
capabilities and determine its ability to link with consumers. So product policy and strategy are of
prime importance to an enterprise, and product decisions dictate the scope and direction of
company activity. Moreover, the market indicators such as profits, sales, image, market share,
reputation and stature are also dependent on them.
• Secondly, it is imperative to realise that the product of any organisation is both a component and a
determinant of the marketing mix as it has a great influence on the other elements of the mix:
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advertising, personal selling, channels of distribution, physical distribution and pricing. So

without proper product policy, a company can not pursue for further elements of marketing mix.
• Pricing
Pricing is basically setting a specific price for a product or service offered. In a simplistic way, Kotler
and Armstrong (2004) refer to the concept of price as the amount of money that customers have to pay to
obtain the product. Setting a price is not something simple. Normally it has been taken as a general law
that a low price will attract more customers. It is not a valid argument as customers do not respond to
price alone; they respond to value so a lower price does not necessarily mean expanded sales if the
product is not fulfilling the expectation of the customers.
Generally pricing strategy under marketing mix analysis is divided into two parts: price determination and
price administration.
 Price determination is referred to as the processes and activities employed

to arrive at a price for a product including consideration of relative prices of
products within the same line, and differences in price for similar products of
differing grades and qualities.
 Price administration is referred to as the activities involved in fitting

basic prices to particular sales situations such as geographic locale, functions
performed by customers, position of distribution channel members, or special
sales situations. An example of this is special discounted prices at, for
instance, GAP, NEXT etc or Coca Cola and Pepsi where different prices are set in
different geographical areas considering the difference in patterns of usage as
well as varying advertisement costs.
• Placement
Placement under marketing mix involves all company activities that make the product available to the
targeted customer. Based on various factors such as sales, communications and contractual considerations,
various ways of making products available to customers can be used. Companies such
as Ford, Ferrari, Toyota, and Nissan use specific dealers to make their products available, whereas
companies such as Nestle involve a whole chain of wholesaler retailers to reach its customers. On a
general note, while planning placement strategy under marketing mix analysis, companies consider six
different channel decisions including choosing between direct access to customers or involving
middlemen, choosing single or multiple channels of distributions, the length of the distribution channel,
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the types of intermediaries, the numbers of distributors, and which intermediary to use based on the
quality and reputation.
• Promotion
Promotional strategies include all means through which a company communicates the benefits and
values of its products and persuades targeted customers to buy them. The best way to understand
promotion is through the concept of the marketing communication process. Promotion is the company
strategy to cater for the marketing communication process that requires interaction between two or more
people or groups, encompassing senders, messages, media and receivers. Taking the example of Nokia,
the sender of the communication in this case is Nokia, the advertising agency, or both; the media used in
the process can be salesmen, newspapers, magazines, radio, billboards, television and the like. The actual
message is the advertisement or sales presentation and the destination is the potential consumer or
customer, in this case mobile phone users.
Broadly defined, optimizing the marketing mix is the primary responsibility of marketing. By
offering the product with the right combination of the four Ps marketers can improve their results and
marketing effectiveness. Making small changes in the marketing mix is typically considered to be a
tactical change.
The 4Ps model is just one of many marketing mix lists that have been developed over the years.
Amongst the other marketing mix models have been developed over the years is Boom and Bitner's 7Ps,
sometimes called the extended marketing mix, which include the first 4 Ps, plus people, processes and
physical layout decisions.
Bob Lauterborn, professor of advertising at the University of North Carolina has tracked the success
of new products introduced into the U.S. According to Bob, 80 percent of new products fail each year.
With such a high failure rate, Bob notes that something isn't working with our "mindset". He wants to
replace the Four P's with his Four C's:
• Consumer
• Cost
• Convenience
• Communication
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Consumer wants and needs (vs. Products)
You can't develop products and then try to sell them to a mass market. You have to study consumer wants
and needs and then attract consumers one by one with something each one wants.
Cost to satisfy (vs. Price)
You have to realize that price - measured in dollars - is one part of the cost to satisfy. If you sell
hamburgers, for example, you have to consider the cost of driving to your restaurant, the cost of
conscience of eating meat, etc. One of the most difficult places to be in the business world is the retailer
selling at the lowest price. If you rely strictly on price to compete you are vulnerable to competition - in
the long term.
Convenience to buy (vs. Place)
You must think of convenience to buy instead of place. You have to know how each subset of the market
prefers to buy - on the Internet, from a catalogue, on the phone, using credit cards, etc. Clothing, Books
and Dell Computers are few businesses who do very well over the Internet.
Communication (vs. Promotion)
You have to consider the communication instead of promotion. Promotion is manipulative - it’s from the
seller. Communication requires a give and take between the buyer and seller. Be creative and you can
make any advertising "interactive". Use phone numbers, your web site address, etc. to help here. And
listen to your customers when they are "with" you.
Developing a brand takes into account these considerations. Developing a brand is developing a promise.
When you take into consideration the "4 C’s" noted above you begin the process of developing a brand!
By M.A.S.Hussain 24
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Marketing Environment
Managing the marketing function would be hard enough if the marketer had to deal only with the
controllable marketing mix variables. But the company operates in a complex marketing environment,
consisting of uncontrollable forces to which the company must adapt. The environment produces both
threats and opportunities. The company must carefully analyze its environment so that it can avoid the
threats and take advantage of the opportunities.
The company's marketing environment includes forces close to the company that affect its ability
to serve consumers, such as other company departments, channel members, suppliers, competitors, and
publics. It also includes broader demographic and economic forces, political and legal forces,
technological and ecological forces, and social and cultural forces. In order to connect effectively with
consumers, others in the company, external partners, and the world around them, marketers need to
consider all of these forces when developing and positioning its offer to the target market.
Company’s Internal Environment
The Task Environment or Micro Environment includes the immediate actors involved in
producing, distributing, and promoting the offering, including the company, suppliers, distributors,
dealers, and the target customers. Material suppliers and service suppliers such as marketing research
agencies, advertising agencies, Web site designers, banking and insurance companies, and transportation
and telecommunications companies are included in the supplier group. Agents, brokers, manufacturer
representatives, and others who facilitate finding and selling to customers are included with distributors
and dealers.
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Major forces in company’s macro environment
The Broad Environment or Macro Environment consists of six components: demographic

environment, economic environment, natural environment, technological environment, political-legal
environment, and social-cultural environment. These environments contain forces that can have a major
impact on the actors in the task
The marketing environment surrounds and impacts upon the organization. There are three key
perspectives on the marketing environment, namely the 'macro-environment,' the 'micro-environment'
and the 'internal environment'.
Marketing Process
The process of analyzing marketing opportunities, selecting target markets, developing the
marketing mix, and managing the marketing effort is called the marketing process.
Consumers stand in the centre. The goal is to build strong and profitable relationships with
customers. As a first step, through marketing segmentation, targeting, and positioning, the company
decides which customers it will serve and how. It identifies the total market, then divides it into smaller
segments, selects the most promising segments, and focuses on serving and satisfying these segments.
Next the company designs marketing mix made up of factors under its control – product, price, place and
promotion. To find the best marketing mix made and put it into action, the company engages in marketing
analysis, planning, implementation, and control. Through these activities, the company watches and
adapts to the actors and forces in the marketing environment.
By M.A.S.Hussain 26
UNIT - I
Marketing Strategy
Marketing Strategies: A marketing strategy serves as the foundation of a marketing plan. A
marketing plan contains a list of specific actions required to successfully implement a specific marketing
strategy. An example of marketing strategy is as follows: "Use a low cost product to attract consumers.
Once our organization, via our low cost product, has established a relationship with consumers, our
organization will sell additional, higher-margin products and services that enhance the consumer's
interaction with the low-cost product or service."
A strategy is different than a tactic. While it is possible to write a tactical marketing plan without
a sound, well-considered strategy, it is not recommended. Without a sound marketing strategy, a
marketing plan has no foundation. Marketing strategies serve as the fundamental underpinning of
marketing plans designed to reach marketing objectives. It is important that these objectives have
measurable results.
A good marketing strategy should integrate an organization's marketing goals, policies, and action
sequences (tactics) into a cohesive whole. The objective of a marketing strategy is to provide a foundation
from which a tactical plan is developed. This allows the organization to carry out its mission effectively
and efficiently.
One used the following techniques to device the Marketing Strategy for the product/service:
• Segmentation
• Targeting
• Positioning
Market segmentation is the process in marketing of grouping a market (i.e. customers) into smaller
subgroups. This is not something that is arbitrarily imposed on society: it is derived from the recognition
that the total market is often made up of submarkets (called 'segments'). These segments are homogeneous
within (i.e. people in the segment are similar to each other in their attitudes about certain variables).
Because of this intra-group similarity, they are likely to respond somewhat similarly to a given marketing
strategy. That is, they are likely to have similar feeling and ideas about a marketing mix comprised of a
given product or service, sold at a given price, distributed in a certain way, and promoted in a certain way.
Market segmentation is widely defined as being a complex process consisting in two main phases:
- Identification of broad, large markets

- Segmentation of these markets in order to select the most appropriate target markets and develop
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Positioning:
Simply positioning is how your target market defines you in relation to your competitiors.
A good position is:

1. What makes you unique .
2. This is considered a benefit by your target market.
Both of these conditions are necessary for a good positioning. So what if you are the only red-
haired singer who only knows how to play a G minor chord? Does your target market consider this a
good thing?
Positioning is important because you are competing with all the noise out there competing for
your potential fans attention. If you can stand out with a unique benefit, you have a chance at getting their
attention.
It is important to understand your product from the customers point of view relative to the competition.
Positioning Strategies
There are seven positioning strategies that can be pursued:
• Product Attributes: What are the specific product attributes?

• Benefits: What are the benefits to the customers?
• Usage Occasions: When / how can the product be used?
• Users: Identify a class of users.
• Against a Competitor: Positioned directly against a competitor.
• Away from a Competitor: Positioned away from competitor.
• Product Classes: Compared to different classes of products.
By M.A.S.Hussain 28
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Targeting:
Target Marketing involves breaking a market into segments and then concentrating your marketing
efforts on one or a few key segments.
Target marketing can be the key to a small business’s success.
The beauty of target marketing is that it makes the promotion, pricing and distribution of your
products and/or services easier and more cost-effective. Target marketing provides a focus to all of your
marketing activities.
So if, for instance, I open a catering business offering catering services in the client’s home,
instead of advertising with a newspaper insert that goes out to everyone, I could target my market with a
direct mail campaign that went only to particular residents.
While market segmentation can be done in many ways, depending on how you want to slice up
the pie, three of the most common types are:
• Geographic segmentation – based on location such as home addresses;
• Demographic segmentation – based on measurable statistics, such as age or income;
• Psychographic segmentation – based on lifestyle preferences, such as being urban dwellers or pet
lovers.
By M.A.S.Hussain 29
UNIT - I
Marketing’s Interface with other Functions:

Several researchers advocate a market orientation that integrates all business functions. An organisation
cannot be marketing-oriented unless all its members embrace the marketing concept and so marketing is
generally seen as a coordinating activity. Cannon (1986) for example writes: “Co-ordination with other
departments within the firm - finance, personnel, production - is as important as managing the specific
aspects of the marketing mix under their control”.
Marketing personnel often play a coordinating role, linking demands from outside the
organisation with the functional departments inside the firm that are capable of satisfying those demands.
There is an extensive body of literature on the inter functional interaction between marketing and the other
functions. Ruekert and Walker characterize the existing literature as usually
“Addressing the specific problems associated with the relationship between marketing and one
particular functional area, such as manufacturing and R&D, in a manner not generalisable across other
functions”.
“Written from a normative perspective, i.e., describing - primarily on the basis of experiential evidence
- how marketing personnel should interact with one or more other departments with the intent of either
improving the effectiveness of the interaction or reducing conflicts”.
The Marketing and Finance Interface

It seeks to explain the significant primary role that marketing plays as a source of income
generation for an organization yet, while being a direct cost centre. It is indeed, the inevitable financial
dual function of marketing in business that motivates some small entrepreneurs to shy away from
marketing budget commitments.
An understanding of the functions of marketing and its various components will enable us to
better appreciate its crucial role in business. While it’s true that marketing activities cost money overall, it
is equally true that marketing activities of the marketing-mix enables a business to generate the cash
required, immediately to support its continuing operation, meet recurring cash flow demands, and to re-
invest in its long-term growth and expansion plans. The efficient application and management of such
income is the function of finance and in essence, both marketing and finance have to work together
effectively.
The Marketing-Manufacturing Functional Interface

The interface between marketing and manufacturing is especially important since these two
functions are charged with managing the essential value-adding activities, and, as such, make many
decisions that carry tremendous implications for competitive performance. Although the activities and
responsibilities of marketing and manufacturing are fundamentally different, they are highly
By M.A.S.Hussain 30
UNIT - I
interdependent. This relationship is often described as conflict prone, and as several researchers have
suggested, the degree of co-ordination achieved between departments is important for organisation
effectiveness.
By M.A.S.Hussain 31
UNIT - I

Managing Profitable Customer Relationship

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Thus Marketing means

• Understanding and responding to customer needs,

1. Collection of aggregation of all buyers is a Market.

• Consumer Market : Companies selling mass consumer goods and services

• Global Markets: Companies selling goods and services in global market-place

• Non-Profit and Governmental Markets: Companies selling their goods to non-

The American Marketing Association define the marketing as:

“Marketing is the performance of business activities that directs the

Marketing management is a business discipline which is focused on the practical application

Evolution of Marketing Role:

The Core Concepts of Marketing

Difference between needs, wants and demands

Value and Satisfaction/Delight

Value is central marketing concept. Marketing can be seen as identification, creation,

Difference between selling and marketing

• Emphasis is on the product. • Emphasis is on customers’ wants.

Marketing Management Tasks

Developing Marketing Strategies and Plans

Capturing Market Insights

Connecting With Customers

Building Strong Brands

Shaping the Market Offerings

Creating Long-term Growth

We define marketing management as the analysis, planning, implementation, and control of

• The Production Concept,

• The Product Concept,

• The Selling Concept,

• The Marketing Concept, and

• The Societal Marketing Concept

The Production Concept:

The Product Concept:

The Selling Concept:

The Marketing Concept:

Regardless of how much marketing research is conducted, no organization can be certain of

The Societal Marketing Concept:

Societal Marketing Concept of various companies

 In addition in Europe, McDonald’s has been recycling vegetable grease

 The US Environmental Protection Agency has recognized McDonald’s

 When McDonald’s received criticism for its environmental policies in the

 When it opened in Hong Kong in 1975, McDonald’s was the first

The 4Ps are:

• Product (or Service)

Marketing mix is an imperative concept in modern marketing and academically it is referred to as

Main Aspects of Marketing Mix

advertising, personal selling, channels of distribution, physical distribution and pricing. So

 Price determination is referred to as the processes and activities employed

 Price administration is referred to as the activities involved in fitting

Consumer wants and needs (vs. Products)

Cost to satisfy (vs. Price)

Convenience to buy (vs. Place)

Communication (vs. Promotion)

Company’s Internal Environment

Major forces in company’s macro environment

The Broad Environment or Macro Environment consists of six components: demographic

- Identification of broad, large markets

A good position is:

There are seven positioning strategies that can be pursued:

• Product Attributes: What are the specific product attributes?

Target marketing can be the key to a small business’s success.

• Geographic segmentation – based on location such as home addresses;

• Demographic segmentation – based on measurable statistics, such as age or income;

Marketing’s Interface with other Functions: