Lecture notes Marketing management

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LECTURE NOTES ON MARKETING MANAGEMENT MBA I YEAR I SEMESTER (JNTUA-R14) Ms.P.REVATHI ASSOC. PROFESSOR DEPARTMENT OF MANAGEMENT STUDIES CHADALAWADA RAMANAMMA ENGINEERING COLLEGE CHADALAWADA NAGAR, RENIGUNTA ROAD, TIRUPATI (A.P) - 517506 P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 1JAWAHARLAL NEHRU TECHNOLOGIAL UNIVERSITY ANANTAPUR MBA Semester – I Th C 4 4 (14E00103) MARKETING MANAGEMENT The objective of the course is to have the basic concepts of Marketing which is one of the important areas of functional management. This is a pre-requisite for taking up any elective rd th paper in 3 and 4 semester in the stream of Marketing. 1. Understanding Marketing Management: Concepts of marketing, Role of Marketing, Marketing Process, Marketing Environment, consumer behavior, business buying behavior, analyzing competitors, qualities of Marketing manager. 2. Market segmentations and Marketing Strategies:- Market Segmentation, Target Market, differentiating and positioning, New Product Development, Product Life Cycle. 3. Planning Marketing Programs:- Levels of product, product lines, product mix, brand and packing, managing services, managing marketing channels, managing direct and on- line marketing. 4. Pricing strategies and promotions:- pricing decisions, methods of pricing, selecting the final price, price discounts, advertising and sales promotions, managing the sales force. 5. Managing the marketing efforts:- organizing, implementing, evaluating and controlling marketing activities, Social responsible marketing, retailing, trends in retailing, Rural Marketing. References: ∑ Marketing Management, Phillip Kotler, Pearson. ∑ MKTG, A South Asian Prospective, Lamb, Hair, Sharma, Mcdaniel, Cengage . ∑ Marketing Asian Edition Paul Baines Chris Fill Kelly page, Oxford. ∑ Marketing Management 22e, Arun Kuar, Menakshi, Vikas publishing . ∑ Marketing in India, Text and Cases, S.Neelamegham, Vikas . ∑ Marketing Management, Rajan Saxena, TMH. P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 2∑ Marketing – The Core, Kerin, Hartley and Rudelius, McGraw Hill, Irwin. ∑ Case Studies in Marketing, The Indian Context, Srinivasan,PHI. ∑ Marketing Management, V.S. Ramaswamy and S. Namakumari, McMillan. ∑ Marketing – concepts and Cases, Etzel, Walker, Stanton, Pandit, TMH. ∑ Introduction to Marketing theory and practice, Adrian Palmer , Oxford University Press . P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 3UNIT -I P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 4UNIT-1 Understanding Marketing Management: 1. Concepts of marketing, 2. Role of Marketing, 3. Marketing Process, 4. Marketing Environment, 5. Consumer behavior, 6. Business buying behavior, 7. Analyzing competitors, 8. Qualities of Marketing manager. P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 51. Concepts of marketing, Introduction: Marketing, as indicated in the term, denotes a process that is continuous in nature. The market should be continuously involved in initiating, conducting and finalizing transactions and exchange. This is an unending process and would continue till production and consumption cease to exist in the world. Meaning: The term ‘marketing’ can be defined analytically or operationally. The analytic way of explaining the terms to show how marketing differs from various other activities of a firm, marketing deals with identifying and meeting human and social needs. One of the shortest definitions of marketing is “meeting needs profitably”. Definitions: According to kotler: “Marketing is the science and art of exploring, creating, and delivering value to satisfy the needs of a target market at a profit. Marketing identifies unfulfilled needs and desires” According to American management association: “Marketing is the process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives”. Thus marketing may be defined as those as those business functions which are most directly and primarily concerned with three activities ∑ The recognition of the demand, ∑ The stimulation of demand ∑ The satisfaction of demand Communication Goods /services Market Industry Collection of buyers Collection of Money/value Order 1.1 Core concepts of marketing: Marketing Management is a social and managerial process by which individuals or firms obtain what they need or want through creating, offering, exchanging products of value with each other. the total marketing can be fulfilled the core concepts of business. P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 6ÿ NEED/ WANT/ DEMAND: Need: It is state of deprivation of some basic satisfaction. eg.- food, clothing, safety, shelter.Want: Desire for specific satisfier of need. eg.- Indians needs food – wants paneer tikka/ tandoori chicken. Americans needs food- wants hamburger/ French fries.Demand: Want for a specific product backed up by ability and willingness to buy. eg.- Need – transportation. Want – Car (say, Mercedes)……but able to buy only Maruti. Therefore, Demand is for Maruti. ÿ PRODUCTS- GOODS/ SERVICES/ PLACE. Product is anything that can satisfy need/ want.Product components are Physical Good., Service,Idea.eg. Fast food- burger/ pizza.Physical Good – material eaten.Service – purchase of raw material/ cooking,Idea – speed of computer/ processing power. ÿ VALUE/ COST/ SATISFACTION: o Decision for purchase made based on value/ cost satisfaction delivered by product/ offering..Product fulfills/ satisfies Need/ Want. Value is products capacity to satisfy needs/ wants as per consumer’s perception or estimation.Each product would have a cost/ price elements attached o Satisfaction – Estimated in terms of time lead & travel comfort. o VALUE– Products capacity to satisfy. o COST– Price of each products. ÿ EXCHANGE/ TRANSACTION: EXCHANGE: – The act/ process of obtaining a desired product from someone by offering something in return. For exchange potential to exist, the following conditions must be fulfilled. There must be at least two parties. Each party has something of value for other party. Each party is capable of communication & delivery P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 7Each party is free to accept/ reject the exchange offer. Each party believes it is appropriate to deal with the other party. ÿ TRANSACTION: – Event that happens at the end of an exchange. Exchange is a process towards an agreement. When agreement is reached, we say a transaction has taken place. Barter transaction. Monetary Transaction. At least two things of value. Condition agreed upon. Time of agreement. Place of agreement. May have legal system for compliance. ÿ RELATIONSHIP/ NETWORKING: Relationship marketing:- It’s a pattern of building long term satisfying relationship with customers, suppliers, distributors in order to retain their long term performances and business. Achieved through promise and delivery of ,high quality, good service, fair pricing, over a period of time. ÿ MARKETING NETWORK: It is made up of the company and its customers, employees, suppliers, distributors, advertisement agencies, retailers, research & development with whom it has built mutually profitable business relationship. Competition is between whole network for market share and NOT between companies alone. ÿ MARKET: A market consists of all potential customers sharing particular need/ want who may be willing and able to engage in exchange to satisfy need/ want. Market Size = fn (Number of people who have need/ want; have resources that interest others, willing or able to offer these resources in exchange for what they want. ÿ MARKETERS/ PROSPECTS: Working with markets to actualize potential exchanges for the purpose of satisfying needs and wants. One party seeks the exchange more actively, called as “ Marketer”, and the other party is called “Prospect”. Prospect is someone whom marketer identifies as potentially willing and able to engage in exchange. Marketer may be seller or buyer. Most of time, marketer is seller. A marketer is a company serving a market in the face of competition. Marketing Management takes place when at least one party to a potential exchange thinks about the means of achieving desired responses from other parties. 1.2 Main concepts of marketing: Studies reveal that different organizations have different perception of marketing and these different perception have led to the formation of different concept of marketing studies also reveal that at least five distinct concept of marketing have guided and still guiding business firms. 1. Production Concept 2. Product Concept 3. Selling Concept 4. Marketing Concept 5. Societal Marketing Concept P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 81.Production Concept: Those companies who believe in this philosophy think that if the goods/services are cheap and they can be made available at many places, there cannot be any problem regarding sale. Keeping in mind the same philosophy these companies put in all their marketing efforts in reducing the cost of production and strengthening their distribution system. In order to reduce the cost of production and to bring it down to the minimum level, these companies indulge in large scale production. 2.Product Concept:Those companies who believe in this philosophy are of the opinion that if the quality of goods or services is of good standard, the customers can be easily attracted. The basis of this thinking is that the customers get attracted towards the products of good quality. On the basis of this philosophy or idea these companies direct their marketing efforts to increasing the quality of their product. 3.Selling Concept: Those companies who believe in this concept think that leaving alone the customers will not help. Instead there is a need to attract the customers towards them. They think that goods are not bought but they have to be sold. 4.Marketing Concept: Those companies who believe in this concept are of the opinion that success can be achieved only through consumer satisfaction. The basis of this thinking is that only those goods/service should be made available which the consumers want or desire and not the things which you can do. Differences between selling and marketing: SELLING MARKETING Selling starts with seller Marketing starts with buyer Selling based on existing activities Marketing based on all activities Selling refers goods and services Marketing refers customer satisfaction What is offered? is enough What should be offered? will think Packing is enough for product protection Packing is for convenient to customers Cost determines price Consumer determines price Customer is last Customer is first P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 95.Societal Marketing Concept: This concept stresses not only the customer satisfaction but also gives importance to Consumer Welfare/Societal Welfare. This concept is almost a step further than the marketing concept. Under this concept, it is believed that mere satisfaction of the consumers would not help and the welfare of the whole society has to be kept in mind. 1.2 Role of Marketing, Introduction: Marketing is perhaps the most important activity in a business because it has a direct effect on profitability and sales. Larger businesses will dedicate specific staff and departments for the purpose of marketing. It is important to realise that marketing cannot be carried out in isolation from the rest of the business. For example:The marketing section of a business needs to work closely with operations, research and development, finance and human resources to check their plans are possible. Operations will need to use sales forecasts produced by the marketing department to plan their production schedules. Sales forecasts will also be an important part of the budgets produced by the finance department, as well as the deployment of labour for the human resources department. A research and development department will need to work very closely with the marketing department to understand the needs of the customers and to test outputs of the R&D section. P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 101. 3.Marketing Process, Introduction: The activities of marketers both reflect and shape the world we live in. Every year new products and services are launched and some of them succeeds on an unprecedented scale. As in the case of Apple's iPod, iPhone, and also iPad. They all are great inventions and highly successful in market. Meaning of Marketing Process The Marketing Process of a company typically involves identifying the viable and potential marketing opportunities in the environment, developing strategies to effective utilise the opportunities, evolving suitable marketing strategies, and supervising the implementation of these marketing efforts. Marketing process involves ways that value can be created for the customers to satisfy their needs. Marketing process is a continual series of actions and reactions between the customers and the organisations which are making attempt to create value for and satisfy needs of customers. In marketing process the situation is analysed to identify opportunities, the strategy is formulated for a value proposition, tactical decisions are taken, plan is implemented, and results are monitored. Steps in Marketing Process Following are the steps involved in the Marketing Process :- ∑ Situation Analysis ∑ Marketing Strategy ∑ Marketing Mix Decision ∑ Implementation and Control ∑ 1. Situation Analysis:Analysis of situation in which the organisation finds itself serves as the basis for identifying opportunities to satisfy unfulfilled customer needs. Situational and environmental analysis is done to identify the marketing opportunities, to understand firms own capabilities, and to understand the environment in which the firm is operating. 2. Marketing Strategy :After identifying the marketing opportunities a strategic plan is developed to pursue the identified opportunities. 3. Marketing Mix Decisions: At this step detailed tactical decisions are made for the controllable parameters of the marketing mix. It includes - product development decisions, product pricing decisions, product distribution decisions, and product promotional decisions. 4. Implementation and Control: Finally, the marketing plan is implemented and the results of marketing efforts are monitored to adjust the marketing mix according to the market changes. P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 111.4. Marketing Environment, Introduction: Environmental analysis is a strategic tool. It is a process to identify all the external and internal elements, which can affect the organization’s performance. The analysis entails assessing the level of threat or opportunity the factors might present. These evaluations are later translated into the decision-making process. The analysis helps align strategies with the firm’s environment. Our market is facing changes every day. Many new things develop over time and the whole scenario can alter in only a few seconds. There are some factors that are beyond your control. But, you can control a lot of these things. Businesses are greatly influenced by their environment. All the situational factors which determine day to day circumstances impact firms. So, businesses must constantly analyze the trade environment and the market. There are many strategic analysis tools that a firm can use, but some are more common. The most used detailed analysis of the environment is the PESTLE analysis. This is a bird’s eye view of the business conduct. Managers and strategy builders use this analysis to find where their market currently. It also helps foresee where the organization will be in the future. ∑ Political factors ∑ Economic factors ∑ Social factors ∑ Technological factors ∑ Legal factors ∑ Environmental factor P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 12P for Political factors: The political factors take the country’s current political situation. It also reads the global political condition’s effect on the country and business. When conducting this step, ask questions like “What kind of government leadership is impacting decisions of the firm?” Some political factors that you can study are: ∑ Government policies ∑ Taxes laws and tariff ∑ Stability of government ∑ Entry mode regulations E for Economic factors: Economic factors involve all the determinants of the economy and its state. These are factors that can conclude the direction in which the economy might move. So, businesses analyze this factor based on the environment. It helps to set up strategies in line with changes. Here listed some determinants you can assess to know how economic factors are affecting your business below: ∑ The inflation rate ∑ The interest rate ∑ Disposable income of buyers ∑ Credit accessibility ∑ Unemployment rates ∑ The monetary or fiscal policies ∑ The foreign exchange rate S for Social factors: Countries vary from each other. Every country has a distinctive mindset. These attitudes have an impact on the businesses. The social factors might ultimately affect the sales of products and services. Some of the social factors you should study are: ∑ The cultural implications ∑ The gender and connected demographics ∑ The social lifestyles ∑ The domestic structures ∑ Educational levels ∑ Distribution of Wealth T for Technological factors: Technology is advancing continuously. The advancement is greatly influencing businesses. Performing environmental analysis on these factors will help you stay up to date with the changes. Technology alters every minute. This is why companies must stay connected all the time. Firms should integrate when needed. Technological factors will help you know how the consumers react to various trends. Firms can use these factors for their benefit: ∑ New discoveries ∑ Rate of technological obsolescence ∑ Rate of technological advances ∑ Innovative technological platforms L for Legal factors: Legislative changes take place from time to time. Many of these changes affect the business environment. If a regulatory body sets up a regulation for industries, for example, that law would impact industries and business in that economy. So, businesses should also analyze the legal developments in respective environments. Here mentioned some legal factors you need to be aware of: P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 13∑ Product regulations ∑ Employment regulations ∑ Competitive regulations ∑ Patent infringements ∑ Health and safety regulations E for Environmental factors: The location influences business trades. Changes in climatic changes can affect the trade. The consumer reactions to particular offering can also be an issue. This most often affects agri-businesses. Some environmental factors you can study are: ∑ Geographical location ∑ The climate and weather ∑ Waste disposal laws ∑ Energy consumption regulation ∑ People’s attitude towards the environment There are many external factors other than the ones mentioned above. None of these factors are independent. They rely on each other. If you are wondering how you can conduct environmental analysis, here are 5 simple steps you could follow: 1. Understand all the environmental factors before moving to the next step. 2. Collect all the relevant information. 3. Identify the opportunities for your organization. 4. Recognize the threats your company faces. 5. The final step is to take action. P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 141.5.Consumer behavior. Introduction: The modern marketing management tries to solve the basic problems of consumers in the area of consumption. To survive in the market, a firm has to be constantly innovating and understand the latest consumer needs and tastes. It will be extremely useful in exploiting marketing opportunities and in meeting the challenges that the Indian market offers. It is important for the marketers to understand the buyer behaviour due to the following reasons. The study of consumer behaviour for any product is of vital importance to marketers in shaping the fortunes of their organisations. ÿ It is significant for regulating consumption of goods and thereby maintaining economic stability. ÿ It is useful in developing ways for the more efficient utilisation of resources of marketing. It also helps in solving marketing management problems in more effective manner. ÿ Today consumers give more importance on environment friendly products. They are concerned about health, hygiene and fitness. They prefer natural products. Hence detailed study on upcoming groups of consumers is essential for any firm. ÿ The growth of consumer protection movement has created an urgent need to understand how consumers make their consumption and buying decision. ÿ Consumers’ tastes and preferences are ever changing. Study of consumer behaviour gives information regarding colour, design, size etc. which consumers want. In short, consumer behaviour helps in formulating of production policy. ÿ For effective market segmentation and target marketing, it is essential to have an understanding of consumers and their behaviour. Consumer behavior Models : Many models have been developed describing the buying process. These models called as consumer behavior models treat a consumer as a decision maker who comes to a market place to buy the products brand for his satisfaction of needs. The buying process has been discussed below through the consumer behaviors models. The important models of buyer behaviors are as follows: 1. Economic model 2. Sociological model 3. Howard-sheath model Economic model: - This model says as “purchasing decision are the result of largely rational and conscious economic calculations. The individual buyer seeks to spend his income on goods that will deliver the must utility (satisfaction) to his tastes and the relative price. Social model.: - The S.M. has been explained by sociologists studying the behaviors of a group of individuals and the manner in which it influences the behaviors of an individual. The models says that the individual is always influenced by a group as he lives in a society where in many group exist like family, reference group etc. P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 15Another classification of consumers : ÿ Harvard sheath model - The H-S model assumes problem-solving approach in buying and assumes input output approach in buying behavior, this model is a comprehensive model and largely approved. ÿ Another way of classification of buyer behavior: ÿ Complex buying behavior: This type of consumers have involvement in purchasing a brand with high difference among goods with brands. ÿ Dissonance reducing buying behavior: This type of consumers have low difference in branding preference with high involvement of purchasing ÿ Variety seeking buying behavior: This type of customers are switching brands often. But they have low involvement of purchasing. ÿ Habitual buying behavior: This type of customers are regularly buy goods in habitual manner. So they have less involvement in purchasing and changing brands. High involvement low involvement High difference Complex buyer Variety seeking Behavior buyer Behavior Dissonance reducing Habitual buying Low difference Buying Behavior Behavior General classification of consumers 1. Personal Consumers 2. Organizational Consumers 3. Impulse Consumers 4. Need-based Consumers 5. Discount Driven Consumers 6. Habitual Consumers ÿ Personal Consumers: This type of consumer is an individual consumer who buy products or services for own use, or for family, or for household use. Finished products are purchased by personal consumer and the purchases are done in small quantities. ÿ Organisational Consumers: This type of consumer can be a business, government, profit or non-profit organisation, or agency who purchases goods or services for organisation to function or for resale purpose. Purchases are done in the form of raw-materials that are processed to finished goods and offered for sale to other consumers. ÿ Impulse Consumers:his type of consumer do unplanned purchases. Purchasing a particular product was not a priority, but when the consumer encounter that buying decision. Impulse consumer purchase what seems product, he makes swift good at the time. P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 16ÿ Need Based Consumer: This type of consumer has a specific intention to purchase a particular type of product. Need-based Consumer is driven by a specific need. He makes buying decision when he actually need that product and not any other time. ÿ Discount Driven Consumers: This type of consumers do purchases when they get some lucrative offer or discount. Their buying decision is highly based on offers or discounts. ÿ Habitual Consumers: Person who is habitual to the usage or consumption of a kind of product is called habitual consumer. For example - person who smoke. Consumer Decision Making Process 1. Problem or Need Recognition: Consumer decision making process begins with an unsatisfied need or problem. Everyday we face multiple problems which individuals resolve by consuming products or services. Consumer problem can be routine or unplanned. For example – run out of milk or cooking oil, car indicating low level of fuel, are some of the routine problems that individuals face. Such problems are quickly recognised, defined, and resolved. Recognition of unplanned problem may take much longer time as it may evolve slowly over time. For example - need of a new refrigerator as existing one is not working properly. 2. Information Search :Information search is done to know about product or service, price, place and so on. In the process of decision making, the consumer engages in both internal and external information search. Internal information search involves the buyer identifying alternatives from his memory. Internal information search is sufficient for low involvement products or services. For high involvement product or P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 17service, buyers are more likely to do external information search. The amount of efforts a buyer put in information search depends on various factors like market, competition, difference in brands, product characteristics, product importance, and so on. 3. Alternatives Evaluation :At this step the buyer identifies and evaluates different alternatives to choose from. It is not possible to examine all the available alternatives. So, buyer develops evaluative criteria to narrow down the choices. Evaluative criteria are certain characteristics that are important to buyer such as price of the product, size, colour, features, durability, etc. Some of these characteristics are more important than others. To narrow down the choices the buyer considers only the most important characteristics. 4. Purchase Decision :The earlier mentioned evaluation step helps the consumer in arriving at a purchase intention. In the decision evaluation stage, the consumer forms preferences among the brands in the choice set. The consumer may also form a purchase intention and lean towards buying the most preferred brand. However factors can intervene between the purchase intention and the purchase decision. A buyer who decides to execute a purchase intention will be making up to five purchase decisions brand decision, vendor decision, quantity decision, timing decision and payment- method decision. 5. Post-purchase Use and Evaluation : Once the buyer makes a decision to purchase a product or service there can be several types of additional behaviour associated with that decision such as decisions on product uses and decision on services related to the product purchased. The level of satisfaction experienced by the buyer after his purchase will depend on the relationship between his expectations about the product and performance of the product. If the buyer is satisfied then he will exhibit a higher probability of repeat purchase of the product or service. The satisfied buyer will also tend to say good words about the product or service. Whereas a highly dissatisfied buyer will not buy the product or service again and spread negative words about service and company. 3. Business buying behavior, : Introduction: The business market is comprised of organizations that, in some form, are involved in the manufacture, distribution or support of products or services sold or otherwise provided to other organizations. The amount of purchasing undertaken in the business market easily dwarfs the total spending by consumers. Because the business market is so large it draws the interest of millions of companies worldwide that market exclusively to business customers. For these marketers understanding how businesses make purchase decisions is critical to their organizations’ marketing efforts. P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 18Consumer decision making process: Marketin Buyers External Buyers decision Buyers purchase g characteri stimuli process decisions stics stimuli Product Economic Cultural Problem recognition Product choice al Price Social Information search Brand choice Technical Evaluation of Dealer choice alternatives Place Personal Political Purchase timing Purchasing behavior Purchase Promotio Psychological amount n Cultural Post-purchase behavior 1.6. Analyzing competitors. Introduction: Process of Analyzing Competitors: Analyzing competitors calls for considering a lot of aspects. A company needs to know everything about its competitors. Note that analyzing competitors is not incidental task, a manager must know about his competitors on a continuous basis. So, it must develop a system to P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 19facilitate the task on regular basis. A detailed and systematic process of analyzing competitors, as described by Philip Kotler, consists of eight steps, see Figure 1. P.Revathi, Assoc.. Prof., Dept. of MBA, CREC Page 20

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