Chapter Notes - Marketing Management

Table of Contents
1. Market
2. Important Features of Marketing
3. Marketing Management
4. Philosophies of Marketing Management
5. Functions of Marketing
6. Marketing Mix
7. Products
8. Branding
9. Packaging
10. Labelling
11. Price Mix
12. Place Mix / Physical Distribution Mix
13. Channels of Distribution
14. Promotion Mix
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Market

The market traditionally means any setting where buyers and sellers come together to exchange goods and services. In modern marketing the term is broader: it includes all real and potential buyers of a product or service, irrespective of the medium of exchange (a shop, telephone, mail, internet or other channels). For example, everyone who may buy a particular dress, bicycle, electric bulb or shampoo forms the market for that item.

The word market is used in several contexts, for example:

• Product market - e.g., cotton market, gold market, share market.
• Geographic market - e.g., national market, international market.
• Type of buyers - e.g., consumer market, industrial market.
• Quantity of trade - e.g., retail market, wholesale market.

A market offering is the complete proposition for a product or service: its features (size, quality, taste), price, place of availability and related services. A successful market offering is developed by understanding and responding to customers' needs and preferences.

Marketing is a social process through which individuals and organisations identify needs and satisfy them by offering products, services or other value in exchange.

Marketer or Seller

If the customer is the seeker of satisfaction, the marketer is the provider of satisfaction. A marketer may be an individual or an organisation that makes products or services available to customers with the aim of fulfilling their needs and wants.

Important Features of Marketing

• Needs and wants: Marketing begins with human needs and wants. A need is a state of felt deprivation (for example, hunger) and marketing seeks to satisfy such needs.
• Creating a market offering: Marketing develops products, services and combinations of benefits (price, place, packaging) to satisfy identified needs.
• Customer value: Buyers choose products that they perceive offer the best value for the money. Marketers must increase perceived value so customers prefer their offering over competitors'.
• Exchange mechanism: Marketing works through exchanges where at least two parties (buyer and seller) each offer something of value to the other.

What can be marketed?

Anything that has value for others can be marketed. Examples include:

• Physical products: e.g., television, mobile phone.
• Services: e.g., insurance, education.
• Persons: e.g., job candidates, public figures.
• Places: e.g., tourist destinations such as Agra (Taj Mahal).
• Events: e.g., fashion shows, film festivals.

Marketing Management

Marketing management is the management of marketing functions. It is the process of organising, directing and controlling activities related to marketing goods and services to satisfy customers' needs and achieve organisational objectives.

Core activities of marketing management include planning, implementation, monitoring and adaptation of marketing programmes.

Marketing management typically follows these five steps:

1. Analysing market opportunities: Conduct market research to identify customer needs and market trends; segment the market; select target segments; and develop positioning to differentiate the offering.

2. Developing marketing strategies: Define product strategy (features, branding), pricing strategy (objectives, levels), promotion strategy (channels and messages) and distribution strategy (how to reach customers).

3. Implementing marketing plans: Execute the marketing mix (Product, Price, Promotion, Place), allocate resources, set timelines and budgets, and coordinate across departments.

4. Managing marketing efforts: Monitor performance, collect feedback, evaluate using marketing metrics (sales revenue, market share, customer satisfaction, ROI) and make adjustments as needed.

5. Reviewing and adapting: Continuously improve strategies based on market feedback, competition and changing customer needs; incorporate learnings into strategic planning.

Philosophies of Marketing Management

Production Concept

• During the early Industrial Revolution demand exceeded supply and few producers existed. Sellers could sell what they produced.
• The production concept emphasises improving production efficiency and distribution to reduce average production cost and offer products that are available and reasonably priced.
• It assumes customers prefer products that are widely available and inexpensive.

Product Concept

• The product concept focuses on continuous improvement in product quality, features and performance, believing that customers favour products of better quality or with superior features.
• Marketing is broader than selling; it involves product decisions (type, model), pricing and selection of sales outlets, while selling is primarily persuasion through salesmanship, advertising and short-term incentives.
• Under product orientation, firms invest in product improvement to maximise profits.

Sales Concept

• With greater supply and competition, simply having good products was not enough; firms began to rely on aggressive selling and promotion to persuade customers to buy.
• The sales concept stresses making sales through advertising, personal selling and sales promotion, often assuming customers will not buy enough without persuasion.
• This approach risks neglecting long-term customer satisfaction in favour of short-term sales.

Marketing Concept

• The marketing concept (or marketing orientation) places customer needs and customer satisfaction at the centre of all company decisions.
• Firms identify and understand the needs of current and potential customers, develop products that satisfy these needs better than competitors and aim to achieve organisational goals (including profit) while delivering customer value.
• Key elements: identify target market; understand needs and wants; create satisfying offerings; outperform competitors in meeting those needs; earn profit while doing so.

Societal Marketing Concept

• The societal marketing concept extends the marketing concept by adding concern for long-term social welfare, ecological and ethical issues.
• It argues that satisfying customer needs should be balanced with what is best for society (environment, resource conservation, public health) in the long run.

Functions of Marketing

Marketing transfers goods and services from producers to consumers while maximising customer satisfaction. From a management perspective, key marketing functions include:

1. Gathering and Analysing Market Information

• Collect data on customer needs and market trends to make informed decisions about products and services.
• Analyse opportunities and threats and assess firm strengths and weaknesses to choose where to compete.
• Modern tools include interactive websites and SMS polling to gather customer preferences and feedback.

2. Marketing Planning

• Set measurable marketing objectives (e.g., increase market share), design strategies and action programmes to achieve them, and allocate resources appropriately.

3. Product Designing and Development

• Product design attracts customers and influences performance; design decisions include features, styling and user convenience.

4. Standardisation and Grading

• Standardisation ensures consistency in quality and reduces inspection costs; grading organises items by quality or size, useful for non-standard goods like agricultural produce.

5. Packaging and Labelling

• Packaging protects products and acts as a silent salesman by attracting customers; labelling communicates essential information (contents, manufacturer, expiry, instructions).

6. Branding

• A brand name differentiates a product from competitors and aids customer recognition and loyalty; examples of brand strategies include using a single brand for many products (e.g., Philips) or separate brands for different lines (e.g., Videocon use explained).

7. Customer Support Services

• Services such as after-sales support, complaint handling, credit facilities and technical help build long-term customer satisfaction and encourage repeat purchases.

8. Pricing of Product

• Price is the amount paid by buyers; it influences demand. Marketers must set pricing objectives, choose pricing strategies, consider production cost, demand and competition, and comply with government regulations where applicable.

9. Promotion

• Promotion aims to inform customers about products and persuade them to buy, using advertising, personal selling, publicity and sales promotion; key decisions include promotion budget and combination of tools (promotion mix).

10. Physical Distribution

• Decide on distribution channels (wholesalers, retailers), manage physical movement from production to consumption, and handle inventory, storage and transportation decisions.

11. Transportation

• Transport moves goods from production centres to consumption areas; choices depend on product type, cost and location of target markets-for example, tea from Assam may be transported across many states.

12. Storage or Warehousing

• Warehousing bridges the time gap between production and consumption; it helps deal with seasonal supply, unpredictable demand and delivery delays. Manufacturers, wholesalers and retailers share warehousing responsibilities.

Marketing Mix

The marketing mix is the set of controllable tools a marketer uses to influence customers in a target market. McCarthy classified the main elements as the four Ps:

• Product
• Price
• Promotion
• Place/Physical distribution

1. Product Mix

• Product means a good or service or any offering that satisfies a need; it includes both tangible and intangible features.

2. Price Mix

• Price affects demand: generally lower price leads to higher demand and vice versa. When setting price, marketers consider production costs, competitor prices, customer perceptions, and service elements (after-sales service, spare parts, credit terms).

3. Promotion Mix

• Promotion covers methods to inform and persuade customers: advertising, personal selling, publicity and sales promotion.

4. Place Mix

• Place deals with physical distribution so products are available to customers at the right place and time and in the right quantity.

Role of marketing: A marketing orientation helps any organisation-profit or non-profit-meet its goals, promotes economic growth and improves living standards.

Products

From a buyer's viewpoint, a product is a bundle of benefits bought to satisfy needs. Buyers seek three types of benefits:

• Functional benefits - practical utility (e.g., transport from a motorcycle).
• Psychological benefits - feelings such as prestige or satisfaction.
• Social benefits - acceptance or recognition from others.

Product design should consider functional, psychological and social benefits together.

Classification of Products

Products are broadly classified into consumer products and industrial products.

1. Consumer Products

Items purchased by individuals for personal use. Examples include soap, edible oil, clothes, toothpaste and fans. Consumer products are further classified into:

• Convenience products: Frequently purchased, low price, little comparison (e.g., cigarettes, ice cream, medicine, newspapers, toothpaste).
• Shopping products: Buyers compare quality, price and style across stores (e.g., clothes, shoes, furniture, radios, televisions).
• Speciality products: Unique items with distinct features and loyal buyers who make extra effort to acquire them (e.g., rare artworks, preferred salons or restaurants).

2. Industrial Products

Goods used as inputs to produce other products or to run an organisation. Examples include raw materials, engines, lubricants, machines and tools. The market for industrial products includes manufacturers, transport agencies, banks, insurance companies, mining companies and public utilities.

Industrial goods are classified as:

• Materials and parts: Raw materials (cotton, sugarcane, minerals like iron ore) and manufactured components (glass, plastics, tyres, batteries).
• Capital items: Installations and equipment used in production (elevators, mainframe computers, hand tools, personal computers).
• Supplies and business services: Short-lived items and services that support production (paint, nails, lubricants, stationery).

Branding

Branding means giving a product a distinctive name, sign or symbol (e.g., Pepsi, Nike) so that it is easily identifiable and protected legally.

Qualities of a Good Brand Name

• Short and easy: Simple to say, spell, recognise and remember (e.g., Ponds, VIP, Rin).
• Suggestive: Hints at benefits or uses.
• Distinctive: Stands out from competitors.
• Adaptable: Usable on packaging, across media and languages.
• Versatile: Can accommodate extensions to new products.
• Legally protectable: Capable of registration and legal defence.
• Staying power: Remains relevant over time.

Advantages of Branding

• Distinguishes products from competitors and aids recognition.
• Encourages customer loyalty and repeat purchases.
• Helps maintain quality standards; customers can complain if quality falls.
• Provides legal protection against unauthorised use by competitors.

Packaging

Packaging is the design and production of the container or wrapper for a product. Because it both protects and promotes a product, packaging is often called the \"silent salesman.\"

Levels of Packaging

• Primary package: Immediate container (e.g., toffee wrapper, matchbox).
• Secondary package: Additional layer kept until product is used (e.g., cardboard box for toothpaste).
• Transportation package: Packaging for storage and movement (e.g., corrugated cartons for transport).

Functions of Packaging

• Product identification: Helps consumers recognise the product (e.g., Colgate red packaging).
• Product protection: Protects against spoilage, breakage, leakage, theft and weather.
• Facilitating use: Design should allow easy opening, handling and use (important for cosmetics, medicines, toothpaste).
• Convenience: Enhances user convenience and handling.
• Product promotion: Attractive packaging can draw attention at the point of sale, especially in self-service outlets.
• Innovation opportunity: New packaging materials and methods (e.g., aseptic packs for milk) expand marketing possibilities.
• Product differentiation: Colour, size and material can signal quality differences to consumers.
• Labelling: The package carries labels that provide information on contents, directions and legal requirements.

Advantages of Packaging

• Improves health and sanitation standards; packaged goods reduce chances of adulteration.
• In self-service retailing, packaging plays an important promotional role.
• Enables preservation and transportation without spoilage, increasing market reach.
• Supports product promotion through attractive design and labelling.

Labelling

Labelling means placing identification marks and information on the package. Labels provide details such as product name, manufacturer, contents, weight/volume, manufacturing and expiry dates, usage instructions and legal warnings. Labels perform several functions:

• Identify the product: Allows customers to recognise a brand or variant (e.g., Cadbury's purple label).
• Describe the product and contents: Producers print important information about ingredients and use.
• Grading: Labels indicate product grades or variants (e.g., tea or tea blends).
• Promotion: Attractive and informative labels can influence purchase decisions (e.g., \"40% extra free\").
• Legal compliance: Labels must display legally required information such as batch number, MRP, weight/volume and statutory warnings (e.g., cigarette health warnings).

Price Mix

Meaning of price: Price is the amount paid by a buyer (or received by a seller) for a product or service. Pricing decisions are crucial because customers buy only if they perceive the product's value to be at least equal to the price.

Factors to consider when framing pricing policy include:

• Pricing objectives: e.g., maximise short-term profit by charging high price; increase market share by charging lower price; survive intense competition by reducing price.
• Cost of production: Must be covered in price setting.
• Demand: High demand with low supply may allow price increases; low demand may require price cuts.
• Competition: Competitors' prices affect pricing choices.
• Government policies: Regulated products must follow statutory pricing rules.

Place Mix / Physical Distribution Mix

This covers activities required to move goods from producers to customers. Important components include order processing, transportation, inventory control and warehousing.

1. Order Processing

• An efficient system is required to process orders accurately and quickly; delays or errors cause customer dissatisfaction and lost sales.

2. Transportation

• Transport moves goods and raw materials from where they are produced to where they are consumed; mode choice affects cost and delivery speed.

3. Inventory Control

• Maintaining optimal inventory avoids shortages and reduces storage costs.

4. Warehousing

• Warehousing bridges gaps between production and consumption, providing storage to handle seasonal production and variable demand.

Channels of Distribution

Channels describe the route goods follow from manufacturer to final consumer.

• Direct channel: Manufacturer → Customer.
• Indirect channels: 
  Manufacturer → Retailer → Customer; 
  Manufacturer → Wholesaler → Retailer → Customer; 
  Manufacturer → Agent → Wholesaler → Retailer → Customer.

Factors determining choice of channel

Choice of channel affects organisational performance and is influenced by product type, market coverage objectives, cost, control requirements and the nature of intermediaries available.

Promotion Mix

The promotion mix is the set of promotional tools used to communicate with target customers. Tools are combined to meet communication objectives.

Tools / Elements of Promotion Mix

1. Advertising: Impersonal paid form of communication via newspapers, magazines, television, radio and digital media to inform and persuade a wide audience.
2. Personal selling: Face-to-face interaction between seller and buyer to make sales and build relationships.
3. Sales promotion: Short-term incentives designed to encourage immediate purchase (coupons, discounts, free samples, contests, BOGO offers, loyalty programmes, bundling, flash sales, referral programmes).
4. Publicity / Public relations: Unpaid media coverage and planned communication to build goodwill and a favourable image.

1. Advertising

Role and importance of advertising

• Enhances customer awareness and confidence, increases demand and market share, helps economic development and informs consumers about product choices.

Objections against advertising

• Advertising increases product cost, can confuse customers with competing claims, may promote inferior products or socially undesirable tastes, and can encourage materialism; yet it also provides information that helps consumers make choices.

2. Personal Selling

Personal selling involves personal contact with prospective buyers to explain and sell products.

Features of Personal Selling

• Personal contact, oral conversation, quick responses to queries, receipt of customer information and development of long-term relationships that assist sales.

Qualities of a Good Salesman

• Physical qualities: Good personality, health and stamina.
• Mental qualities: Alertness, imagination and self-confidence.
• Technical knowledge: Thorough knowledge of the product, its features and the firm.
• Communication skills: Ability to converse confidently and answer queries.
• Honesty: Builds long-term goodwill; dishonest selling harms reputation.
• Courtesy: Politeness generates buyer confidence.
• Persistence: Persistence helps close sales.
• Ability to inspire trust: Convincing power to assure customers of product value.

3. Sales Promotion

Sales promotion comprises short-term incentives to stimulate immediate purchase. Common techniques include:

• Coupons and discounts: Temporary price reductions to attract buyers.
• Free samples: Let potential customers try the product before buying.
• Contests and sweepstakes: Engage customers and raise brand awareness.
• Buy One Get One (BOGO): Provide extra value to encourage purchase.
• Loyalty programmes: Reward repeat customers with points or benefits.
• Bundling: Offer two or more products together at a reduced combined price.
• Flash sales: Short-term deep discounts to create urgency.
• Referral programmes: Reward customers for bringing in new buyers.

4. Public Relations (PR)

Public relations is a strategic management function that helps an organisation manage its reputation and build goodwill. PR uses a variety of tactics to secure favourable coverage and maintain ongoing communication with stakeholders.

Common PR tools

• Press release: A written announcement issued to media about events or newsworthy developments.
• Press kits: Packages containing company background, management information, product photos and past coverage sent to media.
• Brochures: Booklets describing the organisation's mission, projects and capabilities.
• Newsletters: Periodic, less formal publications for internal or external audiences summarising activities and achievements.
• Events and press support: Special events, launches and related activities to generate media interest.
• Conferences and seminars: Forums to inform and persuade specific audiences (e.g., travel seminars by tour companies).
• Websites: Serve as a window for stakeholders and the public to learn about the organisation.

Role of PR in an organisation

1. Publicity: Unpaid media coverage of favourable news helps reach wide audiences and builds credibility.
2. Corporate communication: Newsletters, annual reports, brochures, speeches and media interviews present the company to stakeholders and enhance image.
3. Lobbying: Engaging with government and regulators to explain business positions and influence policy where appropriate.
4. Counselling: Advising management on public opinion, social issues and reputation management.
5. Publicity management: Working with media to ensure accurate and favourable representation; developing newsworthy stories requires research and skill.

Effective PR maintains a positive public image, supports marketing and sales efforts, and builds long-term goodwill with customers, suppliers and other stakeholders.