Principles of

Management –
ME3104D
Marketing Management

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Marketing

A human activity directed at satisfying needs and wants

through exchange process – Philip Kotler

The process by which companies engage customers, build

strong customer relationships, and create customer value
in order to capture value from customers in return – Kotler,
Armstrong, Agnihotri – Principles of Marketing (2018)

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Marketing Concepts

1. Production Concept

2. Product Concept

3. Selling Concept

4. Marketing Concept

5. Social Concept
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Marketing Concepts
1. Production Concept
• Customers are only interested in cheap, easily and widely available goods
• Management is concerned with increasing production to bridge supply-
demand gap
• Increasing production can bring down costs (economies of scale)
• Sales dept. only sells products, production and finance depts. set prices

2. Product Concept
• Customer favours products with the best quality, performance, and features
• Willing to pay higher price for the extra quality
• Companies focus on product and its improvement
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Marketing Concepts
3. Selling Concept
• Sometimes, more production/better quality does not assure more sales
• Businessmen believe aggressive persuasion & selling is the crux of the
business
• E.g., insurance agents

4. Marketing Concept
• Business philosophy with wider implications
• Needs and wants of the customers are the guiding spirits of the org’s
marketing
• Deliver goods & services that satisfy customer needs better than the
competitors goods/services
• 6Consumer orientation with the objective of achieving long-term profits
Marketing Concepts
5. Social Concept
• Marketing is not a business activity alone, must take social
needs into account
• Excessive exploitation of resources, environmental
deterioration, customer movements – recognition of
relevance of marketing for society

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Marketing – Evolution

▪ Market gradually evolved out of barter

system
▪ Industrial revolution, growing population,
improved communication & transport
facilities  growth of marketing as an
important economic activity

Production Product Selling Marketing Society

Concept Concept Concept Concept Concept
Late 1900 1920 1950 1970 Present
1880s
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Marketing – Evolution

1. Beginning of Industrial Revolution – producers could sell

whatever they produced  focused on increasing
production
2. Competition rose – selling became difficult  need for
improving the product & advertising  product concept
& selling concept
3. Producing what consumer needs instead of selling
whatever is produced  consumer orientation in
marketing  marketing concept
4. Unethical practices, damage to environment, long-term
9 damage to society  society concept
Marketing – Evolution

1. Beginning of Industrial Revolution – producers could sell

whatever they produced  focused on increasing
production
2. Competition rose – selling became difficult  need for
improving the product & advertising  product concept
& selling concept
3. Producing what consumer needs instead of selling
whatever is produced  consumer orientation in
marketing  marketing concept

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Production concept
– Focus was on the
product and quality

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Ford Model T, 1908

Selling concept –
Focus on selling the
product and
attracting customers

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Marketing concept
– Focus was on
production and
selling based on
customers needs

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Apple Macintosh, 1984
https://youtu.be/VtvjbmoDx-I
Selling vs Marketing
Selling
Emphasis on the product
Company first makes the
product and figures out
how to sell it
Management is sales volume
oriented
Planning is short-run
oriented in terms of today's
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products and markets
Marketing
Emphasis on customers’ needs
Company first determines
customers' wants and then
figures out how to make and
deliver a product to satisfy
these wants
Management is profit oriented
Planning is long-run oriented,
in terms of new products,
tomorrow's markets, and
future growth
Product Life Cycle

▪ A product passes through 4 stages during its life

time
1. Introduction
2. Growth
3. Maturity
4. Obsolescence or decline

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 Relationship between the sales volume and profit at different stages of the
product life cycle

Sales volume and profit curve look identical in shape

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1. Introduction Stage of PLC
▪ During this stage arrangements for full scale production are made, a
marketing programme is finalised, and the product is offered to the
market.
▪ The sales volume shows an upward trend, but the rate of growth is
quite slow.
▪ At this stage, the product being new and has been first made
available for purchase in the market, it may not face competition in
the market
▪ The company has to communicate with target market and inform
potential customers of the new arrival in a big way, thus incurring
high promotional expenditure.
▪ Because of these high promotional costs and low sales volume
19 during this introduction stage, the profits of the company are low
and sometimes even negative.
2. Growth Stage of PLC
▪ After the product gains acceptance in the market i.e., accepted by
the consumers as well as trade, it enters the growth stage.
▪ Now the demand of the product grows rapidly, generally outpacing
supply. In light of increased sales volume, the company profits also
increase.
▪ Effective distribution and promotional efforts are considered key
factors during this stage, so as to cash on the rising trend of demand.
▪ The company considers increased sales volume as a top priority.
▪ In the wake of rising demand, a large number of competitors begin to
enter the market.
▪ Prices normally remain at the same level or may fall marginally.
Promotional tempo is maintained or even raised to meet the
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challenge of competition
3. Maturity Stage of PLC
▪ It is too optimistic to think that sales will keep on shooting up.
▪ At this stage, it is more likely that the competitors become more
active.
▪ In case your product is a novel one, by now competition would have
come out with a similar product in the market to compete with
yours.
▪ Therefore, the sales are likely to be pushed downwards by the
competitors while your promotional efforts would have to be
increased to try and sustain the sales.
▪ Thus, the sales reach a plateau. This is called the 'maturity stage' or
'saturation'

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4. Decline Stage of PLC
▪ The sales are likely to decline and the product could reach the
'obsolescence' stage. Steps should be taken to prevent this
obsolescence and avoid the decline.
▪ This decline that generally follows could be due to several reasons
such as changes in consumer tastes, improvement in technology
and introduction of better substitutes.
▪ This is the stage where the profits drop rapidly and ultimately the
last stage emerges.
▪ Retaining such a product after this stage may be risky, and certainly
not profitable to the organisation.
▪ Thus, a firm has to finally choose between a total abandonment of
the product or continue incurring losses
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Marketing Mix

▪ A company chooses to enter one or more segments of the

market – not possible to cover the entire market
▪ E.g., Bathing soap – aimed at working class in middle or
LIG as target customers
▪ Once target market is decided  position the product in
the market  product qualities, price, distribution and
advertising efforts
▪ Marketing elements – four basic elements (4 Ps) called
marketing mix
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Marketing Mix Variables

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Marketing Segmentation

▪ Dividing up mass markets into groups with similar

needs and wants
▪ Why? – to achieve competitive advantage and
superior performance
▪ How?
a) identify segments of industry demand,
b) target specific segments of demand, and
c) develop specific marketing mixes for each
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targeted segment
“ From an economic
perspective,
segmentation is built on
the assumption that
heterogeneity in demand
allows for demand to be
disaggregated into
segments with distinct
demand functions

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Market Segmentation

▪ Four patterns to be considered

1. Demographic

2. Psychographic

3. Geographic

27 4. Behavioural
Marketing Segmentation
Four basic types of marketing segmentation
1. Demographic – age, gender, income, occupation & family status
2. Psychographic – customers’ personalities and interests.
Personality traits, Hobbies, Life goals, Values, Beliefs and
Lifestyles
3. Geographic – based on the region they live or work in
4. Behavioural – behaviour patterns when interacting with a
particular business or website
▪ For example, behavioural segmentation can be based on
questions like How many times they visit your online store
before purchasing?; or Which promotional message – a
28 discount code or a free shipping guarantee?
Marketing Segmentation

Geographic – based on six factors

1. Location (country, state, city, ZIP code)
2. Time zone
3. Climate and season
4. Cultural preferences
5. Language
6. Population type and density (urban, suburban, exurban
or rural)
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Marketing Segmentation - Steps
1. Identify the target markets

2. Identify the expectations of target audience

3. Create sub-groups

4. Review the needs of the target audience

5. Name your market segment

6. Marketing strategies

7. Review the behaviour

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8. Size the target market

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