MARKETING

MANAGEMENT
Dr. Belay Kinati , MBA, PhD
Department of Commerce
College of Business and Economics
Wollega University
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 Chapter-1
Marketing Management
Overview

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 Learning objectives
After learning this chapter, you should be able
to:
Define marketing and marketing management
Explain the core concepts of marketing
Discuss the marketing management
philosophies
Discuss demand states and their respective
marketing tasks
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 1.1 What is Marketing ?
 The process of identifying the needs of
customer and satisfying at a profit.
 The process of planning & executing the
conception, pricing, promotion, and
distribution of ideas, goods, and services to
create exchanges that satisfy individuals’ and
organizational objectives (AMA).
It is a managerial function involving both
planning and execution.
Marketing tasks are planned and executed to attain
identifiable objectives.
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 What is Marketing……cont’d
It involves the management of specific elements
or functions: product, pricing, promotion, &
distribution.
It is goal oriented. Its aim is to create exchanges
that satisfy individual & organizational objectives.
Marketing’s concern is with customers and
meeting a need in the marketplace.
In short Marketing is “Meeting needs
profitably”.
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 The goal of marketing is
 To attract new customer by promising superior
value and to keep and grow current customers
by delivering satisfaction.
Marketing, more than any other business
function, deals with customers.
It is critical to the success of every
organization-large or small, for profit or non-
profit, domestic or global.

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 1.2 Marketing concepts
 To explain marketing definition, we
examine the following important terms:
Needs, wants and demands
Products and services
Value and satisfaction
Exchange, transactions, and relationships
Markets

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 Needs, Wants, and Demands
 Need- is human requirements. It is a state of
deprivation of some basic satisfaction.
• The most basic concept underlying marketing is
that of human needs.
• Human needs include: Basic physical needs for
food, clothing, and safety;
• Social needs for belonging and affection; and
• Individual needs for knowledge and self-
expression.
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 Needs, Wants, and Demands…cont’d
 Want - is desire for specific satisfier of need.
E.g., Americans needs food- wants hamburger. It is
shaped by culture and individual personality.
E.g., a hungry man in Ethiopia may want kitifo while
in India chicken biryani.
 Demand- Want for a specific product backed up
by ability and willingness to buy. E.g., Need –
transportation; Want– Car….but able to buy only
Lifan car. Therefore, demand is for Lifan car.

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 Products and Services
 Product- is anything that can be offered to a
market to satisfy a need or want (e.g., services,
events, experiences, persons, places, information,
ideas and physical goods).
 It is not limited to physical objects.
 Services-are activities or benefits offered for
sale that are essentially intangible and do not
result in the ownership of anything(e.g., mgt
consultants).
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 Values, Satisfaction, and Quality
 Consumers face a broad array of products and
services that might satisfy a given need.
 They choose among these products based on
their perceptions of the value that various
products deliver.
 Consumers buy from the firm that they believe
offers the highest customer delivered value -
the difference between total customer value
and total customer cost.

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Values, Satisfaction, and Quality…cont’d
Total customer value- the total of all of the
product, services, personnel and image values
that a buyer receives from a marketing offer.
Total customer cost- the total of all the
monetary, time, energy and psychic costs
associated with a marketing offer.
i.e., Customer delivered value=total customer value
– total customer cost

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Marketer can increase the value of the
customer offering by
 raising benefits,
 reducing costs,
 raising benefits and reducing costs,
 raising benefits by more than the raise in
costs, or
 lowering benefits by less than the
reduction in costs.
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 Satisfaction
 Customer satisfaction depends on a product’s
perceived performance(PP) in delivering value
relative to a buyer’s expectation(CE).
If the product’s performance falls short of the
customer’s expectations, the buyer is dissatisfied;
If PP=CE, the buyer is satisfied.
If PP>CE=delighted;

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 Satisfaction…..Cont’d
Satisfied customers make repeat purchases, &
tell others about their good experiences with
the product. As a result, revenue and
profitability will increase.
On the other hand, dissatisfied customers will
withdraw his consumption, will suggest others
not to buy or will complain to the authority
about his dissatisfaction and this will reduce
revenue and profitability.

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 Satisfaction…..Cont’d
When customer’s perceived benefits of the product
exceeds the delivered benefits he is delighted.
Delight is unexpected or spontaneous value
addition to the customer already chosen package.
Eg., clean floor & shelves for supermarket, free
delivery for out of stock goods etc.
Delighted customers are FIVE TIMES more
likely to plan on repeat purchasing than merely
satisfied customers.

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Exchange, Transactions &
Relationships
 Exchange- is the core of marketing, involves
obtaining a desired product from someone by
offering something in return.
 Marketing occurs when people decide to
satisfy needs and wants through exchange
relationships.
 Exchange is a value-creating process because
it normally leaves both parties better off.
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 For exchange potential to exist, five conditions must
be satisfied:
1. There are at least two parties.
2. Each party has something that might be of value to
the other party.
3. Each party is capable of communication and
delivery.
4. Each party is free to accept or reject the exchange
offer.
5. Each party believes it is appropriate or desirable to
deal with the other party.
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 Exchange, Transactions &
Relationships…..cont’d
 Transaction- is a trade of values between two or more
parties: A gives X to B and receives Y in return.
 Two parties are engaged in exchange if they are
negotiating-trying to arrive at mutually agreeable terms.
 When an agreement is reached, we say that a
transaction takes place.
 Transaction involves at least two things of value,
agreed-upon conditions, a time of agreement, and a
place of agreement. A legal system supports and
enforces compliance on the part of the transactions.

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Exchange, Transactions &
Relationships…..cont’d
 Relationship Marketing- process of
creating, maintaining, and enhancing
strong, value-laden relationships with
customers and other stakeholders.

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 Markets
 Four ways for people to obtain a product: self-
production, coercion, begging and exchange.
 The concept of exchange leads to the concept of
a market.
 Traditionally, a “market” is a physical place
where buyers and sellers gathered to exchange
goods. Now marketers view the sellers as the
industry and the buyers as the market.

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 Market … cont’d
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.

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 A simple marketing system

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 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.
Marketing management involves demand management
and building profitable customer relationships.
Beyond designing strategies to attract new customers
and create transactions with them, companies now are
striving to retain current customers and build lasting
customer relationships

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 Demand Management
 The organization has a desired level of
demand for its products.
 At any point in time, there may be
 no demand, adequate demand, irregular
demand, or too much demand, and
 marketing management must find ways to
deal with these different demand states.

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 Demand States and Their Respective
Marketing Tasks
A. Negative Demand- demand in which a major
part of the market dislikes the product and
may even pay a price to avoid it.
Marketing Task: is to analyze why the
market dislikes the product and whether a
marketing program consisting of product
redesign, lower prices and more positive
promotion can change beliefs and attitudes.
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  B. No Demand- A demand situation when the target
consumers may be unaware or uninterested in the
product.
 Farmers may not be interested in new farming
methods, and college students may not be interested
in foreign language courses.
Marketing Task: find ways to connect the benefits
of the product with people’s natural needs and
interests.
Marketer should strive to convince that consumption
of such products eases the user’s day-to-day life.

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 C. Latent (Hidden) Demand- Consumers may share
a strong need that cannot be satisfied by any existing
product. E.g., demand for better schools, and more
fuel-efficient cars.
Marketing Task: The appropriate marketing task is
to measure the size of the market and develop goods
and services to satisfy the demand.
D. Declining Demand- Every organization faces
declining demand for one or more of its products.
E.g., Churches have seen membership decline.
Marketing Task: The marketer must analyze the
causes of the decline and determine whether demand
can be re-stimulated by new target markets, and by
changing product features, or by more effective
communication styles.
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  E. Irregular Demand- Many organizations
face demand that varies on a seasonal,
daily, or even hourly basis. E.g., Museums
are under visited on weekdays, and
overcrowded on weekends.
A very high demand or very low demands
are both not favorable for firms.
Marketing Task: is to find ways to alter
the pattern of demand through flexible
pricing, promotion, and other incentives.
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  F. Full Demand- A demand situation where the
actual demand is equal or at least proportional to
what the firm can assume with its existing
resources.
Marketing Task: is to maintain the current level
of demand in the face of changing consumer
preferences and increasing competition.
The organization must maintain or improve its
quality and continually measure consumer
satisfaction.

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 G. Overfull Demand- Some organizations face a
demand level that is higher than they can or want
to handle.
It is not a favorable demand pattern for most firms
as it results in more work pressure and even
dissatisfaction for some of the buyers.
Marketing Task: finding ways to reduce demand
temporarily or permanently. It seeks to discourage
overall demand by raising prices, reducing
promotion and service. Reduce demand from those
parts of the market that are less profitable.
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  H. Unwholesome Demand- Unwholesome
products will attract organized efforts to
discourage their consumption.
Campaigns have been conducted against
cigarettes, alcohol, hard drugs & handguns.
Marketing Task: is to get people who like
something to give it up, obey the rules of some
established agencies, using fear messages (e.g.,
Cigarettes are dangerous for health, Cigarettes
are dangerous for pregnant women etc) and
reduce availability.
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 MARKETING MANAGEMENT PHILOSOPHIES

Marketing management wants to design

strategies that will build profitable
relationships with target consumers.
But what philosophy should guide these
marketing strategies?
What weight should be given to the interests
of customers, the organization, and society?

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 MARKETING MANAGEMENT
PHILOSOPHIES….cont’d

There are five alternative concepts under

which organizations conduct their marketing
activities:
Production concept
Product concept
Selling concept
Marketing concept
Societal marketing concepts

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 1. Production Concept
 It is the idea that consumers will favor products that
are available and highly affordable. Therefore,
management should focus on improving production
and distribution efficiency. It is one of the oldest
orientations that guides sellers.
 Still useful/effective philosophy in two types of
situations:
1. When the demand for a product exceeds the supply.
2. When the product’s cost is too high and improved
productivity is needed to bring it down.
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2. Product Concept
 Other businesses are guided by the product
concept, which holds that consumers will
favor products that offer the most in quality,
performance, or innovative features.
 That the organization should therefore
devote its energy to making continuous
product improvements.
 The product concept, like production
concept, can also lead to marketing
36myopia.
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 3. The Selling Concept
 Holds that consumers, if left alone, will not
buy enough of the firm’s products unless it
undertakes a large-scale selling and promotion
effort.
Is typically practiced with unsought goods-
those that buyers do not normally think of
buying, such as insurance or blood donations.
Most firms practice the selling concept when
they are overcapacity.
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Their aim is to sell what they make rather than make
what the market wants. Such a marketing strategy
carries high risks.
It focuses on creating sales transactions rather than on
building long-term & profitable customer
relationships.
4. The Marketing Concept -is a philosophy that holds
achieving organizational goals depends on knowing
the needs and wants of target markets and delivering
the desired satisfactions better than competitors do.
Customer focus and value are the paths to sales and
profits.
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The marketing concept rests on four pillars:
1.Target market
2. Customer needs
3. Integrated marketing
4.Profitability.
Instead of a product-centered “make and sale”
philosophy, marketing concept is customer-
centered “sense and respond” philosophy.
The job is not to find the right customers for
your product, but to find the right products for
your customers.
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The selling and Marketing Concepts Contrasted

Starting point
Focus Means Ends

Selling
FactoryExisting products
and promoting Profits through sales
volume

The selling concept

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The selling concept takes an inside-out
perspective. Whereas the marketing concept takes
an outside-in perspective.
It starts with the factor, focuses on the company’s
existing products, and calls for heavy selling and
promotion to obtain profitable sales.
It focuses primarily on getting short-term sales
with little concern about who buys and why.
The marketing concept starts with a well-defined
market, focuses on customer needs, and integrates
all the marketing activities that affect customers.
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In turn, it yields profits by creating lasting
relationships with the right customers based on
customer value and satisfaction.
5. The Societal Marketing Concept
Is a principle of enlightened (open minded)
marketing that holds that a company should make
good marketing decisions by considering
consumers’ wants, the company’s requirements,
and society’s long run interests.

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 The societal marketing concept calls upon
marketers to build social and ethical
considerations into their marketing practices.
Companies should balance three
considerations in setting their marketing
strategies:
1. company profits,
2. consumer wants, and
3. society’s interests.
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 Three Considerations Underlying the Societal
Marketing

Society
(Human welfare)

Societal
marketing
concept
Consumers Company
(Want satisfaction) (Profits)

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 Functions of a Marketing Manager
The marketing manager’s job is to develop
effective marketing strategies that give the
company a strong competitive advantage in its
target market.
This involves 4 key functions;
 Analysis
 Planning
 Implementation
 Control

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 Functions of a Marketing Manager…
cont’d
1. Marketing analysis
involves examining the company’s
markets and marketing environment to find
attractive opportunities.
2. Marketing planning
involves setting marketing objectives and
deciding on the marketing strategies to
achieve the objectives.
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 Functions of a Marketing Manager…
cont’d
3. Implementation
 is putting the plans into action. It involves day-
to-day activities that translate the plan to work.
4. Marketing control
Control is the process of measuring and
evaluating the results of marketing strategies
and taking corrective action to ensure that
objectives are attained.

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 Marketing Management Tasks
A marketing manager should perform several
tasks including the following;
Conduct marketing research to generate
information on consumers and products.
Study competitors’ products and market
trends.
Monitor and estimate future demand for
products.
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Marketing Management Tasks…cont’d
 Develop new products and services through
marketing research, customer feedback and other
sources of information.
 Identify and implement promotion strategies to
attract customers.
 Prepare marketing plans, budgets and schedules.
 Decide on price and price offers to customers.
 Monitor customer satisfaction over time.

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 Questions ?

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