Marketing Management
BM 4804
Warin Chotekorakul
Session 1, 2003
Ch. 1 Defining marketing for the
21st century
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The questions that we should be able to
respond after completing the chapter:
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What is the new economy like?
What are the tasks of marketing?
What are the major concepts and tools of
marketing?
What orientations do companies exhibit in the
marketplace?
How are companies and marketers responding
to the new challenges?
What is the new economy like?
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What is the old economy?
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Based on the “Industrial Revolution” and
on managing “manufacturing” industries
Goal: efficiency
Hierarchical management being used
What is the new economy like? (2)
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New economy
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Based on the “Digital Revolution” and the
management of “information”
Substantially differentiated, customized,
and personalized
Less hierarchical management—Why?
What are the tasks of marketing?
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3 stages that a company might pass:
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Entrepreneurial marketing
Formulated marketing
Intrepreneurial marketing
Question: Each of the three stages requires
the same marketing tasks? Yes
What are the tasks of marketing? (2)
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Marketing is the task of creating,
promoting, and delivering goods and
services to consumers and businesses.
Demand States and Marketing Tasks
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Negative demand:
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occurs when the market dislikes the product
Marketing Task: to analyze why the market dislikes
the product, and how to change the beliefs and
attitudes
No demand:
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occurs when target market is unaware of the product
Marketing Task: to connect the benefits of the
product with the needs
Demand States and Marketing Tasks 2
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Latent demand:
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A strong need that cannot be satisfied by
any existing product
Marketing task: to measure the size of the
potential market and develop effective pdt
Declining demand:
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Decreasing demand for the product
Marketing task: to reverse the declining
demand through creative remarketing
Demand States and Marketing Tasks 3
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Irregular demand:
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Demand varies on a seasonal, daily basis
Marketing task: to find ways to alter the same
pattern of demand called “Synchromarketing”
Full demand:
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Occurs when a company is satisfied with the
volume of business
Marketing task: to maintain current demand level
facing the changing consumer preferences and
increasing competition
Demand States and Marketing Tasks 4
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Overfull demand:
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Occurs when demand level is higher than a
company can handle
Marketing task: to find ways to reduce the
demand called “Demarketing” : General and
Selective demarketing
Unwholesome demand:
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For unwholesome products e.g. handguns,
cigarettes, X-rated movies/websites
Marketing task: to get people who like these
things to give them up
What are the major concepts and
tools of marketing?
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Definitions of Marketing:
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Social: Marketing is a societal process by
which individuals and groups obtain what
they need and want through creating,
offering, and freely exchanging products and
services of value with others.
Managerial: Marketing is the art of selling
products
What are the major concepts and
tools of marketing? (2)
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Marketing Management: the ways to
achieve desired responses from other
parties
Definition of Marketing Management
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The art and science of choosing target
markets and getting, keeping, and growing
customers through creating, delivering,
and communicating superior customer
value
Core Marketing Concepts
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Segmentation and Target markets:
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Segmentation or Market Segmentation is the
process of dividing a market into groups whose
valuations of products are similar within groups and who
differ across those groups
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Market Segment is a group of actual or potential
customers who can be expected to respond in a similar
way to a product or service offer
Core Marketing Concepts (2)
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Segmentation and Target markets (2):
the process of selecting
segments to serve and identifying customers
in target segments by evaluating the
attractiveness of segments
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Market Targeting is
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Target Market is
is a market that the
company chooses to serve effectively and
profitably
Core Marketing Concepts (3)
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Marketplace, Marketspace, and Metamarket:
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Marketplace is physical (shopping in a store)
Marketspace is digital (shopping on the net)
Metamarket is a group of complementary pdts
and services that are closely related in the
minds of consumers but are spread across a
diverse set of industries e.g. home ownership
market
Core Marketing Concepts (4)
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Marketers and Prospects
Needs, Wants, and Demands:
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Needs are the basic human requirements
Wants are specific objects that might
satisfy the need
Demands are wants plus ability and WTP
Censure: marketer cannot create needs,
but can influence wants.
Core Marketing Concepts (5)
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Product, Offering, and Brand:
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Why does a customer buy a product (car)?
If so, we can call them as Value Proposition.
What is the difference between “product
and offering”?
Is offering a subset of product?
Brand enables a customer to know the offering
comes from what company
Core Marketing Concepts (6)
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Value, Cost, and Satisfaction:
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How do consumers choose among the
many products that might satisfy a given
need? The guiding concept is value.
Value is the consumer’s estimate of the
product’s overall capacity to satisfy his or
her needs.
Value is the combination of Quality, Service,
and Price (QSP) or Customer Value Triad
Core Marketing Concepts (7)
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Value, Cost, and Satisfaction (2):
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How to measure Value?
Value = Benefits/Costs
Exchange and Transaction:
Exchange is the act of obtaining a desired product
from someone by offering something in return.
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Exchange is the defining concept underlying
marketing.
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Core Marketing Concepts (8)
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Exchange and Transaction (2):
A transaction is a trade of values between two or
more parties. Two types: Monetary VS Barter
transactions
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Transaction =
/ Transfer
Relationships and Networks:
Relationship Marketing: aim to build up L-T,
trusting, and “win-win” relationships with customers,
distributors, dealers, and suppliers
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RM brings down costs on transaction and time
Core Marketing Concepts (9)
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Relationships and Networks (2):
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The final outcome of RM is the building of a
unique company asset called a marketing
network.
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Marketing Network consists of the company
and its supporting stakeholders.
Core Marketing Concepts (10)
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3 types of marketing channels:
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Communication channels: to deliver and
receive messages from target buyers
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Distribution Channels: to display, sell, or
deliver the physical products or services to buyer
or user
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Service channels: to facilitate transactions
Channels
Communication
Channels
1. Monologue
2. Dialogue
Distribution
Channels
1. Warehouse
2. Transportation
Vehicle
3. Trade
Channels
3.1 Wholesaler
3.2 Retailer
3.3 Distributor
3.4 Agent
Service Channels
Facilitating
Organizations
such as banks,
Insurance
companies
Core Marketing Concepts (11)
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Supply Chain:
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Describes a longer channel stretching from
raw mat to components to final products
that are carried to final buyers
Competition:
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Brand Competition
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Industry competition
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Form competition
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Generic competition
Core Marketing Concepts (12)
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Marketing Environment:
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Task (micro) environment (main actors)
Broad (macro) environment
Marketing Program/Plan:
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To achieve the company’s objectives
Marketing mix: set of marketing tools used
to pursue marketing objectives in the target
market
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Core Marketing Concepts (13)
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Marketing Program/Plan (2):
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Robert introduced that the sellers’ 4 Ps
correspond to the customers’ 4 Cs
Four Ps
Product
Price
Place
Promotion
Four Cs
Customer solution
Customer cost
Convenience
Communication
What orientations do companies
exhibit in the marketplace?
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6 company directions
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The
The
The
The
The
The
production concept
product concept
selling concept
marketing concept
customer concept
societal marketing concept
1. The Production concept
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The concept holds that consumers will favor
those products that are widely available and
inexpensive.
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The assumption holds in 2 types of situations:
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Where the demand for a product exceeds supply
(in 3rd World countries)
Where the product’s cost is high and has to be
brought down through increased productivity to
expand the market
2. The Product concept
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The concept holds that consumers will favor
those products that offer the most quality,
performance, or innovative features.
The companies get little or no customer
input, and very often they will not examine
competitors’ products.
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Planned Obsolescence Strategy e.g. Lancer
VS Lancer Cedia by Mitsubishi
2. The Product concept (2)
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The product concept leads to “marketing
myopia” (Levitt, 1975) which means
managers often view their market from a
narrow, product-oriented perspective, and
this may result in missed opportunities.
For example, railroad management.
3. The Selling concept
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The concept holds that consumers, if
left alone, will ordinarily not buy
enough of the organization’s products.
Thus, the company must undertake an
aggressive selling and promotion effort.
For companies with unsought products,
or when companies have overcapacity.
Inside-out approach
4. The Marketing concept
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The concept holds that the job is not to
find the right customers for your product,
but the right product for your customers
(outside-in approach).
Satisfying needs of the customers
4. The Marketing concept (2)
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3 Types of marketing orientation:
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Reactive market orientation: understanding
and meeting customers’ expressed needs
Proactive marketing orientation:
concentrating on customers’ latent needs
Total market orientation: combination of the
above two
Points to study from Marketing Concept
5 Types of Needs:
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Stated needs: A fast laptop
Real needs: High performance, Accurate result
Unstated needs: Good service
Delight needs: Mouse and mouse pad
Secret needs: Smart, savvy consumers
Points to study…(2)
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3 types of marketing on basis of
countering to customer’s needs:
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Responsive Marketing
Anticipative Marketing
Creative Marketing
Points to study…(3)
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Integrated Marketing: all the company’s
departments work together to serve the
customer’s interests
External Marketing: marketing directed
at people outside the company
Internal Marketing: marketing directed
at employees of the company
5. The customer concept
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Outside-in approach
One-to-one marketing
To capture a larger (market) share of
each customer’s expenditures
Question: Is customer share the same
idea as market share?
6. The societal marketing concept
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The concept holds that the organization’s
task is to determine the needs, wants, and
interests of target markets and to deliver the
desired satisfactions more effectively and
efficiently than competitors in a way that
preserves or enhances the consumer’s and the
society’s well-being.
e.g., the Body Shop
When to Review Marketing Plan
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Sales decline
Slow growth
Changing buying pattern
Increasing competition
Increasing marketing expenditures
Company Responses and Adjustment
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Re-engineering
Outsourcing
E-commerce
Benchmarking
Partner-supplier
Alliances
Market-centered
Global and local
Decentralized
Marketer Responses and Adjustments
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Relationship marketing
Customer lifetime value
Customer share
Target marketing
Individualization
Customer database
Integrated marketing communication
Channel as partner
Every employee a marketer
Model-based decision
Takeaways from Ch.1
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The old VS the new economies
The marketing tasks (and for diff DD states)
Major marketing concepts and tools
6 Types of orientations
Company and marketer responses in the
new economy