MARKETING MANAGEMENT

MODULE 1
Concepts of Marketing

Dr. Chithambar Gupta V

Professor
Presidency University
Bengaluru
 Topics

• Concept of Marketing-Needs, Wants and Demand

• Nature of Marketing
• Importance of Marketing
• Marketing Management Philosophies
• Marketing concept and its evolution- Marketing Mix
(4Ps of Marketing)
• Marketing Versus Selling
• Marketing Environment
• Consumer Behaviour
• Segmentation, Targeting & Positioning
Marketing is Everywhere
 What is Marketing?
• Marketing is a social and managerial
process by which individuals and groups
obtain what they need and want through
creating and exchanging products and value
with others.
• More simply: Marketing is the delivery of
customer satisfaction at a profit.
• Marketing: Managing Profitable Customer
Relationships
 What is Marketing?

Marketing is about managing profitable

customer relationships
• Attracting new customers
• Retaining and growing current customers
 Understanding the Marketplace

Core Concepts Need

• State of felt deprivation
Needs, wants, and • Example: Need food
demands
Wants
Marketing offers: including • The form of needs as
products, services and shaped by culture and the
experiences individual
Value and satisfaction • Example: Want Chapati
Exchange, transactions and Demands
relationships • Wants which are backed by
Markets buying power
 Marketing Debate

Does Marketing
Create or Satisfy Needs?
 Marketers do not create needs.

Needs pre-exist marketers.

Marketers – along with other societal factors –

influence wants.
 I physically I want clean, I create a
Need

Demand
Want
need water to safe, and good demand for
survive tasting water Smartwater
since it is vapor
distilled with
added
electrolytes for
taste and
health

Needs become Wants when they are Demands are Wants for specific
Needs describe human
directed to specific objects that products backed by willingness and
requirements.
might satisfy the need. an ability to pay.
Example: Food to eat
Example: A burger to eat Example: KFC Spicy Zinger Burger
 What is a market?

“A market consists of all the potential

customers sharing a particular need
or want who might be willing and able
to engage in exchange to satisfy that
need or want” (Philip Kotler).
 Understanding the Marketplace

Core Concepts Marketing offer

• Combination of
Needs, wants, and demands products, services,
Marketing offers: information or
including products, experiences that satisfy
services and a need or want
experiences • Offer may include
services, activities,
Value and satisfaction
people, places,
Exchange, transactions and information or ideas
relationships
Markets
 Understanding the Marketplace

Core Concepts Value

• Customers form
Needs, wants, and expectations regarding
demands value
Marketing offers: including • Marketers must deliver
products, services and value to consumers
experiences Satisfaction
Value and satisfaction • A satisfied customer will buy
Exchange, transactions and again and tell others about
relationships their good experience
Markets
 Understanding the Marketplace

Core Concepts Exchange

• The act of obtaining a
Needs, wants, and demands desired object from
Marketing offers: including someone by offering
products, services and something in return
experiences • One exchange is not the
Value and satisfaction goal, relationships with
several exchanges are the
Exchange, goal
transactions and • Relationships are built
relationships through delivering value and
Markets satisfaction
 Understanding the Marketplace

Core Concepts Market

• Set of actual and potential
Needs, wants, and buyers of a product
demands • Marketers seek buyers that
Marketing offers: including are profitable
products, services and
experiences
Value and satisfaction
Exchange, transactions and
relationships
Markets
 What is Marketing?

Marketing is an organizational function

and a set of processes for creating,
communicating, and delivering value
to customers and for managing
customer relationships
in ways that benefit the
organization and its stakeholders.
- Philip Kotler
 Core Marketing Concepts

Products
Needs, wants, and
and demands Services

Core
Core
Marketing
Marketing
Concepts
Concepts
Markets
Value, satisfaction,
and quality

Exchange, transactions,
and relationships
 What is Marketing
Management?
Marketing management is the
art and science
of choosing target markets
and getting, keeping, and growing
customers through
creating, delivering, and communicating
superior customer value.
Company Orientations

Production Product

Selling Marketing
 PRODUCTION CONCEPT (1850s-1920s)

• Industrial revolution; mass production

• Few products and little competition
• Inward looking orientation
• Management becomes cost focused
• Objective is cost reduction
• Business mission is focused on current production
capabilities
• Manufacture products and aggressively sell them to
customers
 PRODUCT CONCEPT

• Companies become centered on

constantly improving the product
• Myopic focus on the product
• No attention on the other ways in which
customers can fulfill their needs –
MARKETING MYOPIA
• Customer does not buy a product, he
buys an offering that fulfills his needs
SELLING CONCEPT (1920s-1950s)
• The focus was on personal selling and advertising
• Sales seen as the major means for increasing profits
• Product or service is not designed and made
according to customer’s requirements
• Customer has to be persuaded to believe that the
product or the service meets his requirements
• Customer dissatisfied and bad-mouths company
• Marketing makes selling redundant
 THE MARKETING CONCEPT
(1950s-present)

• Customer orientation replaced the “hard sell” of the

sales-led era
• Determination of the needs and wants of customers
before introducing products or services
• All activities are focused upon providing customer
satisfaction
• Every employee in an organization is a marketer
• Internal communication
Societal Marketing Concept
Society
Society
(Human
(Human Welfare
Welfare))

Societal
Societal
Marketing
Marketing
Concept
Concept

Consumers
Consumers Company
Company
(Wants)
(Wants) (Profits)
(Profits)
 Marketing Management
Philosophies

Production Concept •Consumers favor products that are

available and highly affordable.
•Improve production and distribution.

Product Concept •Consumers favor products that offer

the most quality, performance, and
innovative features.

Selling Concept •Consumers will buy products only if

the company promotes/ sells these
products.
Marketing Concept •Focuses on needs/ wants of target
markets & delivering satisfaction
better than competitors.
Societal Marketing Concept
•Focuses on needs/ wants of target
1 - 24
markets & delivering superior value.
 Evolving Views of Marketing’s
Role

Finance
Production
Production Finance
Human
resources
Marketing Human
resources Marketing

a. Marketing as an b. Marketing as a more

equal function important function
 Evolving Views of Marketing’s
Role

Production on
c ti

Fi
du

na
o
Pr

nc
e
Marketing Customer
re
Hu ur

c e M
so

ur an
n ar

s
ma ces

ce
ke

so m
i n tin
F

re Hu
n

c. Marketing as the d. The customer as the

major function controlling factor
 Evolving Views of Marketing’s
Role

Production

Marketing

Customer
re
Hu ur
so

e
ma ces

nc
a
n

i n
F

e. The customer as the controlling

function and marketing as the
integrative function
 Quote by Mahatma Gandhi on
Customer

"A customer is the most important visitor on our

premises.
He is not dependent on us. We are dependent on him.
He is not an interruption in our work - he is the purpose
of it.
We are not doing him a favour by serving him. He is
doing us a favour by giving us the opportunity to serve
him.
- Mahatma Gandhi"
The Selling Vs Marketing
Concepts
 Differences between Marketing &
Selling
S.No Marketing Selling
1 Focuses on customer needs Focuses on seller needs

2 Begins before Production Begins after production

3 Continues after sale Comes to an end with sale

4 A comprehensive term in A narrow term in terms of

terms of meaning meaning
5 Philosophy of business Routine day to day physical
process
 Differences between Marketing &
Selling
S.No Marketing Selling

6 Profits through customer Profits through sales volume

satisfaction
7 Let the seller be aware Let the buyer be aware

8 Integrated approach Fragmented approach

9 Long-term perspective Short-term perspective

10 Customer first then Product Product first then Customer

 Marketing Mix
All elements within the control of the firm that
communicate the firm’s capabilities and image
to customers or that influence customer
satisfaction with the firm’s product and
services, are referred to as marketing Mix.
It includes the 4Ps of Marketing:
• Product
• Price
• Place
• Promotion
The Four P’s
 Marketing Mix

Product
•A product is an offering which a business offers to
customers. Strategies are needed for deciding what
products to introduce, managing existing products over
time, and dropping products that are no longer viable.
Price
•Setting the base price for a product is a marketing
decision. Others necessary strategies preferred from
producers to customers and items within a product line,
terms of sale, and possible discounts.
 Marketing Mix

Promotion
•Strategies are needed to combine individual methods
such as advertising personal selling and sales
promotion into an integrated communications
campaign.
Place
•The distribution strategies followed by the company.
Decisions regarding the number of channel members,
type of channels used etc.
Questions for developing Marketing Mix Strategy

• What problems can this product solve for customers?

• What features are included in the products to meet this need?
Product • What will differentiate it from the competitor’s?
• How will it be used by the customer?
• What is the perceived value of the product to the buyer?
Price • What is the market fixed price for this kind of product?
• How much is your price when compared with the competitor’s?
• Where is the first place buyers check when looking for your kind of
product? Is it a store, boutique, or online?
Place • How to determine the best distribution channels?
• Do you need to take multi-channel approach? If yes, which channels?

• What are the promotion methods of your competitors?

Promotion • Which digital channels does your target market use often?
• What is the return-on-investment from each of the promotion channels?
SEGMENTATION,
TARGETING &
POSITIONING (STP)
 Market strategies

• Undifferentiated (Mass) Marketing – A

market coverage strategy in which a firm
decides to ignore market segment
differences and go after the whole market.
• Focuses on the common needs of the
consumers
• Difficulty arises in developing a product and
a marketing program that will appeal to the
largest no of buyers
 Undifferentiated
Marketing
• Mass marketing: Seller engages in mass
production, mass distribution, and mass
promotion of one product for all buyers.
• E.g.: Ambassador from HM.
• Assumption: An organization cannot satisfy the
needs and wants of all consumers.
• Mass marketing is dying
• Companies are turning to ‘Differentiated
Marketing.’
 Market strategies
• Differentiated (Segmented) Marketing
- A market-coverage strategy in which a
firm decides to target one / several
market segments and designs separate
offers for each segment.

• E.g.: Different variety of credit cards like

silver, gold, and platinum
 What is a Market Segment?

A market segment consists of a group of

customers who share a similar set of
needs and wants.

Segmentation is dividing market into

smaller groups of buyers with distinct
needs, characteristics, or behaviour
who might require separate products
or marketing mixes
Differentiated (Segmented) Marketing: Nandini
Milk

1. Double Toned Milk

2. Toned Milk
3. Standardized Milk
4. Cow Milk
5. Buffalo Milk
6. Full Cream Milk (Samruddhi)
7. Skim (Slim) Milk
 Nandini Milk
Segmentation in Milk
# Type of Milk Milk Fat Milk SNF
(%Not less than) (%Not less than)

1Double Toned Milk 1.5 9

2Toned Milk 3 8.5
3Standardized Milk 4.5 8.5
4Cow Milk 3.5 8.5
5Buffalo Milk(Karnataka) 5 9
6Full Cream Milk (Nandini 6 9
Shubham)
7Skim Milk Not more than 8.7
0.5

UHT Milk (Nandini Good Life)

 Segmenting Consumer Markets
• Geographic—nations, states, regions,
countries, cities, neighborhoods
• Demographic—age, life-cycle stage,
gender, income, generation, social class
• Psychographic--psychological/personality
• Behavioral--knowledge of, attitude
toward, use of, or response to a product
 Basis of segmentation

• Geographic segmentation- Dividing a market into

different geographical units such as nations, states,
regions, countries, cities, or neighborhoods.

• Demographic segmentation- Dividing the market

into group based on demographic variables such as
age, sex, family size, family life cycle, income,
occupation, education, religion, and nationality.
 Demographic Segmentation
• Age and Life Cycle—customer wants and
abilities change with age.
• Life stage—a person’s major concern
(e.g., divorce, 2nd marriage, buying new
home)
• Gender—male and female
• Income—upper, middle, lower
• Social class—occupation, education, type
and location of housing
• Generation
 Basis of segmentation
• Psychographic Segmentation- Dividing a market into different
groups based on psychological / personality traits, lifestyles, or
values.
• Values – Religion, caste-system in India E.g: Veg & Non-veg
food.
• Lifestyle – , fast-to-cook / eat foods, Gold-plated wrist
watches from Titan (Tanishq), along with other models such
as Edge, Regalia, Nebula & Raga. Fastrack brand for Youth
& adventurous.
• Personality traits – Femina is targeted at the “women of
substance” or those with a brader world view.
• SRI Consulting Business Intelligence’s (SRI-BI) VALS
Framework
• High Resources - Innovators, Thinkers, Achievers,
Experiencers
• Low Resources - Believers, Strivers, Makers, Survivors
 Basis of segmentation
• Behavioural segmentation- Dividing a market
into groups based on consumer knowledge,
attitude, use, or response to a product
• Occasion segmentation- Dividing the market into
groups according to occasions when buyers get the
idea to buy, actually make their purchase , or use
the purchase item
• Benefit segmentation- Dividing the market into
groups according to the different benefit that
consumers seek from the product
• Also multiple segmentation bases may be used
based on the requirement like Geo-
Demographic
 Behavioral Segmentation
Behavioral Variables
• Occasions—time of day, week, month, year
• Benefits—the customer seek
• User Status—nonusers, ex-users, potential
users, 1st time users, regular users
• Usage Rate—light, medium, heavy
• Buyer-Readiness—to buy a product
• Loyalty Status—hard core, split, shifting,
switchers
• Attitude—enthusiastic, positive, indifferent,
negative, hostile
Requirements for effective segmentation
• Measurable - The size, purchasing power, and
profile of the segment
• Accessible - The market segments can be
effectively reached and served
• Substantial - The market segments are large or
profitable enough to serve
• Differentiable - The segments are conceptually
distinguishable
• Actionable - Effective programs can be
designed for attracting and serving the
segments
 Target Marketing

• Firm should evaluate the various segments

and decide how many and which segments it
can serve the best
• After evaluating various segments company
should decide which and how many
segments it will target
• Target market - A set of buyers sharing
common needs or characteristics that the
company decides to serve.
 Market Positioning.

• The act of designing the company’s

offering and image to occupy a clear,
distinctive, and desirable place in the
minds of target market.

• Positioning refers to ‘How

organisations want their consumers to
see their product’.
Market Positioning: – Chocolates
 Value Propositions
The value a company promises to deliver to customers, should they choose to buy their product

Scorpio by Mahindra & Mahindra:

A vehicle that provides the luxury and comfort of a car,

and the adventure and thrills of an SUV

Domino’s Pizza:

A good hot pizza, delivered to your door within 30-

minutes of ordering, at a moderate price
 Positioning
• The way the product is defined by consumers
on important attributes .
• The place the product occupies in
consumer’s minds relative to competing
products
• Positioning involves implanting the brand’s
unique benefits and differentiation in
customer’s minds.
• E.g.: surf excel is positioned as a powerful
washing powder which retains the colour of the
cloth by cleaning all kinds of dirt
 Value Proposition

• Value Proposition refers to a set of benefits they offer to customers to satisfy their needs.
• It states the target market for the offering, and the differentiating value, the offering provides to its customers.
• In other words, the unique value a business offers to its customers. Unique Selling Proposition (USP)
• It's why your customers will want to do business with you.

• the target market for the offering and the differentiating value the offering provides to its customers
• In other words the unique value a business offers to its customers.
• It's why your customers will want to do business with you
 Target Marketing (STP)
• The process of evaluating each
market segment’s attractiveness
and selecting one or more
segments to enter.

• Basically include 3 steps as

follows:
o Segmentation
o Targeting
o Positioning
 Steps in Market Segmentation,
Targeting,and Positioning
Market Market Market
Segmentation Targeting Positioning
1. Identify 3. Evaluate 5. Identify
segmentation attractiveness possible
variables and of each positioning
segment the segment concepts for
each target
market segment
4. Select the
2. Develop target 6. Select,
profiles of segment(s) develop, and
resulting communicate
segments the chosen
positioning
concept
 Target Market strategies
• Concentrated (Niche) Marketing – A niche
is a more narrowly defined customer group
seeking a distinctive mix of benefits.
• Identify niches by dividing a segment into
sub-segments.
• Customers in the niche have a distinctive set
of needs and will pay a premium to the firm
that best satisfies their needs.
• E.g.: Organic vegetables, Ayurvedic Products,
“all-natural” products, Low-calorie / cholesterol
products, Photography / Auto Magazines.
 Target market strategies
• Concentrated (Niche) Marketing - A
market coverage strategy in which a firm
goes after a large share of one or a few
niches.
• Applicable when company resources are
limited
• Since the manufacturer has better knowledge
about the market products or services can be
marketed effectively and efficiently
• Niches are fairly small and normally
attract one or two competitors.
 Marketing Environment

Philip Kotler :
A company marketing environment
consists of the actors and forces that
affect the company’s ability to develop
and maintain successful transactions
and relationships with its target
customers.
 Marketing
Marketing Environment
Environment
• All the actors and forces influencing the
company’s ability to transact business
effectively with it’s target market.

• Includes:
• Microenvironment - forces close to the company
that affect its ability to serve its customers.
• Macroenvironment - larger societal forces that
affect the whole microenvironment.
 Micro environment

Micro environment- The actors close to the

company that affect its ability to serve its
customers– the company, suppliers,
marketing intermediaries, customer markets,
competitors & publics.
Partially under the control of the firm

Micro Level
Influences that affect a particular firm
The
The Microenvironment
Microenvironment

Company
Company

Publics
Publics Forces
Forces Affecting
Affecting aa Suppliers
Suppliers
Company’s
Company’s Ability
Ability to
to
Serve
Serve
Customers
Customers
Competitors
Competitors Intermediaries
Intermediaries
Customers
Customers
 The
The Company’s
Company’s
Microenvironment
Microenvironment
• Company’s Internal Environment-
Environment functional
areas such as top management, finance, and
manufacturing, etc.

• Suppliers - provide the resources needed to

produce goods and services.

• Marketing Intermediaries - help the company to

promote, sell, and distribute its goods to final
buyers.
 The
The Company’s
Company’s
Microenvironment
Microenvironment
• Customers - five types of markets that
purchase a company’s goods and services.

• Competitors - those who serve a target

market with similar products and services.

• Publics - any group that perceives itself

having an interest in a company’s ability to
achieve its objectives.
 Macro Environment

• External forces largely beyond the

control of a firm that influence the
marketing opportunities and activities of
all firms.
• Firms can influence this environment
but have no direct control over it.
Macro Level
Influences that affect all firms
 The
The Macroenvironment
Macroenvironment

Demographic
Demographic

Cultural
Cultural Forces
Forces that
that Shape
Shape Economic
Economic
Opportunities
Opportunities
and
and Pose
Pose Threats
Threats
to
to aa Company
Company
Political
Political Natural
Natural
Technological
Technological
 The
The Company’s
Company’s
Macroenvironment
Macroenvironment
• Demographic - monitors population in terms
of age, sex, race, occupation, location and
other statistics.

• Economic - factors that affect consumer

buying power and patterns.

• Natural
Natura - natural resources needed as
inputs by marketers or that are affected by
marketing activities.
 The
The Company’s
Company’s
Macroenvironment
Macroenvironment
• Technological - forces that create new
product and market opportunities.

• Political - laws, agencies and groups that

influence or limit marketing actions.

• Cultural - forces that affect a society’s

basic values, perceptions, preferences,
and behaviors.
CONSUMER BUYING
BEHAVIOUR
 Consumer market
• All the individuals and households who
buy or acquire goods and services for
personal consumption

Consumer buying behaviour

• Is the buying behaviour of the final

consumer
 Characteristics affecting consumer
behaviour
Culture - the set of basic values, perceptions,
wants, and behaviors learned by a member of
society from family and other important institutions
• Values in India: • Values in USA:
• Respect & care for • Achievement & Success
elders • Activity
• Honesty & Integrity
• Efficiency & Practicality
• Hard work
• Progress
• Achievement &
Success • Material Comfort
• Humanitarianism • Individualism
• Sacrifice • Freedom
• Youthfulness
 Social factors

• Reference group-the group in the society

whom you consult before taking a purchase
decision
• Includes
• Opinion leader, friends, and colleagues
• Family - strong influencer of buyer
behaviour
• Roles and status - person’s position in
the society and his role in the society.
Cultural and Social Factors affecting Consumer
Behavior: Opinion Leaders
Opinion Leaders are key individuals in a group who influence the behavior of the members of
the group by providing them with relevant information about new trends and products in the
market

Opinion Leaders are often highly confident, socially active, and involved with the category.

Marketers try to reach the opinion leaders by identifying their demographic and
psychographic characteristics, identifying the media they read, and directing messages at
them.
 Social Factors

Reference
Family
groups

Social
Statuses
roles
 Personal factors

• Age and life cycle stage - change in

requirements of the people over their life time
(family life cycle stage)
• Occupation –blue collar and white collar
• Economic situation-person’s economic
situation
• Lifestyle-pattern of living ,spending pattern
• Personality and self concept - the unique
psychological characteristics that lead to
relatively consistent and lasting responses to
one’s own environment
Stages in Consumer Buying Decision
Process

Involvement determines
Problem Recognition whether some steps are de-
emphasized or extended.

Information Search This is more of a simultaneous

than a sequential process.

Evaluation

Purchase Decision

Postpurchase
Behavior
 Need recognition

• The first stage of the buyer decision

process, in which the consumer
recognizes a problem or need
• Internal Stimuli
• E.g.: thirst, hunger
• External Stimuli
 Information search

• The stage of the buyer decision process in

which the consumer is aroused to search for
more information
• The consumer may simply have heightened
attention or may go into active information
search
• E.g.: purchasing of a new car
• Info is available in
• personal sources (family, friends, neighbors)
• commercial sources (advertising, sales people,
dealers, packaging, displays)
• Public sources (mass media)
• Experiential
Successive Sets Involved in
Consumer Decision Making
 Evaluation of alternatives

• The stage of the buyer decision

process in which the consumer uses
information to evaluate alternative
brands in the choice set
• E.g.: comparison between two or more
brands
Sales and Product
Life Cycle
 Purchase decision

• The buyer ‘s decision about which

brand to purchase
• Factors affecting purchase decision are
• Attitude of the others-influencers and other
influencing factors
• Unexpected situational factors-factors
such as expected income, expected price,
and expected product benefits
 Post purchase behaviour
• The stage of the buyer decision process
in which consumers take further action
after purchase , based on their
satisfaction or dissatisfaction

Cognitive dissonance
• Buyer discomfort caused by post
purchase conflict
 What is Marketing

The process of building profitable

customer relationships by creating value
for customers and capturing value in
return