MARKETING MANAGEMENT 1

SESSION 1 AND 2
What do you think?

What do people think of marketing?

 The Value of Marketing

Financial success often depends on marketing ability

Successful marketing builds demand for products and services, which, in turn,
creates jobs
Marketing builds strong brands and a loyal customer base, intangible assets that
contribute heavily to the value of a firm
 The Scope of Marketing

Marketing is about identifying and meeting human and social needs

AMAs 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 is both a philosophy centered on serving customers and a set of

activities and skills to solve economic and social problems. Almost everyone is
involved in marketing something to someone, whether it is a young man
courting a young woman, a CEO trying to get a contract or a junior worker
trying to get a promotion. ( Excerpt from Philip Kotler : Some of my
adventures in marketing)
 Marketing Management

The art and science of choosing target markets and getting, keeping, and growing
customers through creating, delivering, and communicating superior customer
value

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 What is Marketed?

Goods

Services

Events

Experiences

Persons

Places

Properties

Organizations

Information

Ideas
 Who Markets?

A marketer is someone who seeks a responseattention, a purchase, a vote, a

donationfrom another party, called the prospect

Demand creation or demand stimulation??

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 8 Demand States

Negative
Nonexistent
Latent
Declining
Irregular
Unwholesome
Full
Overfull

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 A Modern Exchange Economy

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A Simple Marketing System
 Key Customer Markets

Consumer markets
Business markets
Global markets
Nonprofit & governmental markets

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 Core Marketing Concepts

Needs: the basic human requirements such as for air, food, water, clothing, and
shelter

Wants: specific objects that might satisfy the need

Demands: wants for specific products backed by an ability to pay

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 Types of Needs

STATED

REAL

UNSTATED

DELIGHT

SECRET

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 Core Marketing Concepts

Segmentation
Target markets
Positioning

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 Core Marketing Concepts

Value proposition: a set of benefits that satisfy those needs

Offerings: a combination of products, services, information, and experiences

Brands: an offering from a known source

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 Core Marketing Concepts

Marketing channels

COMMUNICATION

DISTRIBUTION

SERVICE
 Core Marketing Concepts

Paid media: TV, magazine and display ads, paid search, and sponsorships

Owned media: a company or brand brochure, web site, blog, Facebook page, or
twitter account

Earned media: word of mouth, buzz, or viral marketing

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 Core Marketing Concepts

Impressions: occur when consumers view a communication

Engagement: the extent of a customers attention and active involvement with a

communication

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 Core Marketing Concepts

Value: a combination of quality, service, and price (qsp: the customer value triad)

Satisfaction: a persons judgment of a products perceived performance in

relationship to expectations

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 Core Marketing Concepts

Supply chain: a channel stretching from raw materials to components to finished

products carried to final buyers

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 Core Marketing Concepts

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

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 Core Marketing Concepts

Marketing environment

Task environment ( Actors )

Broad environment

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 The New Marketing Realities

Technology

Globalization

Social responsibility

New consumer capabilities

New company capabilities
Prof. Jagdish Sheth on How the digital age will impact marketing

https://www.youtube.com/watch?v=yVfrbwa2G7Q
 Marketing in practice

Marketing balance

Marketing accountability

Marketing in the organization

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 Company Orientation toward
the Marketplace

PRODUCTION

PRODUCT

SELLING

MARKETING

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BUILDING CUSTOMER VALUE, SATISFACTION AND LOYALTY
 CUSTOMER-ORIENTATION AND FIRM

Customers :raison d'etre for business

 CUSTOMER PERCEIVED VALUE

Customer perceived value is the difference between the prospective

customers evaluation of all the benefits and all the costs of an offering and
the perceived alternatives.
 DETERMINANTS OF
CUSTOMER PERCEIVED VALUE

Total customer benefit Total customer cost

Product benefit Monetary cost

Services benefit Time cost

Personal benefit Energy cost

Image benefit Psychological cost

 APPLYING VALUE CONCEPTS

A firm can improve its offers in three ways:

1. By improving the economic, functional, and psychological benefits of its
product, services, people, and/or image.
2. By reducing the buyers nonmonetary costs by lesser time, energy, and
psychological investment.
3. By reducing the products monetary cost to the buyer.
 STEPS IN A
CUSTOMER VALUE ANALYSIS

IDENTIFY MAJOR ATTRIBUTES AND BENEFITS THAT CUSTOMERS VALUE

ASSESS THE QUALITATIVE IMPORTANCE OF DIFFERENT ATTRIBUTES AND
BENEFITS
ASSESS THE COMPANYS AND COMPETITORS PERFORMANCES ON THE
DIFFERENT CUSTOMER VALUES AGAINST RATED IMPORTANCE
EXAMINE RATINGS OF SPECIFIC SEGMENTS
MONITOR CUSTOMER VALUES OVER TIME
 HIGH CUSTOMER VALUE

The Value Proposition - Promise to customer on expected experience

Value Delivery System Ensures that promise is kept
 DELIVERING SUPERIOR VALUE

Customer Value Management (CVM) by Tata Steel through a cross-functional joint

team of the company and the customer has succeeded in delivering superior
customer value

- Customized offerings / Customer involvement

 SATISFACTION

Perceived performance Vs Expectation

This concept integrates all stakeholders
PERIODIC SURVEYS
CUSTOMER LOSS RATE
MONITOR COMPETITIVE PERFORMANCE

ONLY 5% OF TOTAL 25%DISSATISFIED CUSTOMERS COMPLAIN

54% TO 75% CUSTOMERS WILL REBUY IF COMPLAINTS ARE RESOLVED
DISSATISFIED CUSTOMERS GRIPES TO 11 PEOPLE.
CUSTOMERS AND VALUE TO FIRMS
MAXIMIZING CUSTOMER LIFETIME VALUE

Customer Profitability

Customer Equity(Sum
total of all value)

Lifetime Value
CUSTOMER-PRODUCT PROFITABILITY ANALYSIS
 CLV

What the customer is worth

Discounted future stream of profits
Enhances shareholder value

Term Value

Net Profit Margin(m) 100000

Maintenance Expenses(a) 15000

Adjusted Profit Margin(m-a) 85000

Discount Rate 12%

Retention rate 80%

Margin Multiple=r/(1+d-r) 2.5

Increase
CLV = (m-a)X r/(1+d-r) 212500 CLV??
 WHAT IS
CUSTOMER RELATIONSHIP MANAGEMENT?

CRM IS THE PROCESS OF CAREFULLY MANAGING DETAILED INFORMATION

ABOUT INDIVIDUAL CUSTOMERS AND ALL CUSTOMER TOUCH POINTS
TO MAXIMIZE CUSTOMER LOYALTY.
 FRAMEWORK FOR CRM

IDENTIFY PROSPECTS AND CUSTOMERS

DIFFERENTIATE CUSTOMERS BY NEEDS AND VALUE TO COMPANY
INTERACT TO IMPROVE KNOWLEDGE
CUSTOMIZE FOR EACH CUSTOMER

Managing the Marketing Funnel

 ATTRACTING AND
RETAINING CUSTOMERS

REDUCE THE RATE OF DEFECTION

INCREASE LONGEVITY
ENHANCE SHARE OF WALLET
TERMINATE LOW-PROFIT CUSTOMERS
FOCUS MORE EFFORT ON HIGH-PROFIT CUSTOMERS
Holistic Marketing Dimensions
 INNOVATION

https://www.youtube.com/watch?v=tV6gygNPetU
MODERN MARKETING MANAGEMENT

PEOPLE

PROCESSES

PROGRAMS

PERFORMANCE
 MARKETING
MANAGEMENT TASKS

Developing market strategies and plans

Capturing marketing insights

Connecting with customers

Building strong brands

 MARKETING
MANAGEMENT TASKS

Creating value
Communicating value
Delivering value

Creating successful long-term growth