MANAGEMENT - II
Chapter # 1
Marketing Management
Prepared by
Anurag Pal
‘Marketing is a social and managerial process
by which individuals and groups obtain what
they want and need through creating, offering
and exchanging products of value with others’
Kotler 1991
SOME BASIC CONCEPTS
1 NEED
• Needs are basic and necessary
requirements of human beings, with out
fulfillment of which life will not be possible.
• For example food, shelter, clothing
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SOME BASIC CONCEPTS
2. Wants
• Those needs which are not basic in nature,
but if we get them life becomes full of comforts
A human need which is shaped
by culture and individual.
i.e. I want a Coca Cola.
I want kebab.
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SOME BASIC CONCEPTS
3 Demand
• Demand is the willingness to pay and ability
to pay for the satisfaction of needs and
wants.
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This is Demand
Buying Power
Want
“Demand”
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SOME BASIC CONCEPTS
• Product
• A product may be a good, service, place or
an idea. So all tangible and intangible
attributes which can satisfy human wants
are product.
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SOME BASIC CONCEPTS
• Market
Market means,
“The people or organizations with needs to
satisfy, money to spend and willingness to
spend money”.
• A market is a place where buyer and seller
met together.
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WHY MARKETING….?
• In order to fulfill the needs and wants, the buyers
have a lot of options to purchase a particular
product.
• For example. if you want to purchase a sim card
you can go for Roshan, Etisalat and MTN, etc
similarly
if you want to purchase burger, you can have it from
KFC, AFC or any other restaurant in Kabul city.
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What is Marketing?
Marketing is a total system of
business activities designed to plan product
price, promote, and place (distribute)
want-satisfying product to target markets
in order to achieve oganizational objectives.
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Definitions of marketing
‘Marketing is the management process that identifies and
satisfies customer requirements profitably’
The Chartered Institute of Marketing
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‘Marketing is a social and managerial process by which
individuals and groups obtain what they want and need
through creating, offering and exchanging products of value
with others’
Kotler 1991
Marketing Mix
The “Four P’s”
roduct
ricing
lace
(Distribution)
romotion
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Marketing Mix
The “Four P’s”
• The Marketing Mix
The strategy (Planning) of designing the
combination of products where and when
it is distributed, how it is promoted and at
what price.
Product
Pricing
Place
Target
Market
Promotion
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The Four P`s
The Four C`s
Marketing
Mix
Place
Product
Customer
Solution
Price
Customer
Cost
ConvenPromotion ience
Communication
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Market Segmentation &
Target Marketing
Market Segmentation
Dividing a market into
customer categories
Target Marketing
Selecting a category of
customers with similar wants
and needs who are likely to
respond to the same products
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Segmentation and Target Marketing
#1
#2
Market Segmentation:
Divide the market into
segments of customers
Target Marketing:
Select the segment to
develop
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Marketing Management Philosophies
Production Concept
•Consumers favor products that are
available and highly affordable.
•Improve production and distribution.
Product Concept
•Consumers favor products that offer
the most quality, performance, and
innovative features.
Selling Concept
•Consumers will buy products only if
the company promotes/ sells these
products.
Marketing Concept
Societal Marketing Concept
•Focuses on needs/ wants of target
markets & delivering satisfaction
better than competitors.
•Focuses on needs/ wants of target
markets & delivering superior value.
18
Design a customer-driven marketing strategy
Marketing Concept
• There are five alternative concepts under which organization designs and
carry out marketing strategies. ( the production concept-the product
concept-selling concept- the marketing concept-the social marketing
concept)
1
The Production Concept
The idea that consumers will favor products that are available and
highly affordable and that the organization should therefore focus on
improving production and distribution efficiency.
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2 The product Concept
The idea that consumers will favor products that offer the
most quality, performance, features and that the
organization should therefore dedicate its energy to
making continuous product improvement.
3
The Selling Concept
The idea that consumers will not buy enough of the firm’s
products unless it undertakes a large scale selling and
promotion effort.
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Design a customer-driven marketing strategy
cont...
4
Marketing Concept
The marketing management philosophy that achieving organizational
goal depends on knowing the needs and wants of target markets and
delivering the desired satisfaction better than competitors do.
5
The Social Marketing Concept
The company should make good marketing decisions by
considering consumers long run interests, and society long
run interests.
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Company Orientations
Towards the Marketplace
Production Concept
Consumers prefer products
that are widely available
and inexpensive
Product Concept
Consumers favor products that
offer performance, most
quality, or innovative features
Selling Concept
Consumers will buy products
only if company aggressively
promotes/sells these products
Marketing Concept
Focuses on needs/ wants of
target markets & delivering
value better than competitors1-22
Value and Satisfaction
Expectation
8
Performance
10
Expectation
Performance
10
8
If performance is lower than expectations, satisfaction is low.
If performance is higher than expectations, satisfaction is high.
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Customer Value
• Customer value = customer
benefits – customer costs
Customer benefits
Anything desired by the
customer that is received in
an exchange
Customer costs
Anything a customer gives up
in an exchange for benefits
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The Marketing Concept
MARKETING CONCEPT
Customer
orientation
+
+
Organization’s
performance
objectives
Coordinated
marketing
activities
Customer
satisfaction
Organizational
success
+
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Societal Marketing Concept
Society
(Human Welfare)
Societal
Marketing
Concept
Consumers
(Wants)
Company
(Profits)
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Demand forecasting
• Purposes of forecasting
Purposes of short-term forecasting
a. Appropriate production scheduling.
b. Reducing costs of purchasing raw materials.
c. Determining appropriate price policy
d. Setting sales targets and establishing controls and incentives.
e. Evolving a suitable advertising and promotional campaign.
f.
Forecasting short term financial requirements.
Purposes of long-term forecasting
a. Planning of a new unit or expansion of an existing unit.
b. Planning long term financial requirements.
c. Planning man-power requirements.
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Demand forecasting
• A forecast is a prediction or estimation of
future situation under given conditions
• Demand forecasting is different from
demand estimation in the sense that
forecasting predicts about future trends of
sales while estimation tries to find out
expected present sales level.
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Demand forecasting
continue…..
• Passive forecast: where prediction about
future is based on assumption that firm
does not change the course of its action
• Active forecast: where forecasting is done
under the condition of likely future changes
in the actions by a firm
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Purpose of forecasting
• Short run forecast: seasonal patterns are
more important. It helps in preparing sales
policy, price policy, production planning to
avoid under and over stock conditions.
• Long run forecast: it is helpful for capital
planning.
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Methods of forecasting
Methods of forecasting
Opinion Polling method
consumer’s survey
sales force opinion
expert’s opinion
Statistical method
fitting trend line method
least square method
moving average
exponential smoothing
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Opinion survey/consumer’s
survey
• Relatively simple and practicable method
for forecasting demand of new products
• Opinions are collected from prospective
buyers regarding their future consumption
• Sampling technique is used to survey
customers
• From sample it is possible to forecast
demand of targeted population
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Expert’s opinion
• In this method expert’s opinion is sought on
the future demand for product
• It is biased and subjective
• The accuracy of predicted demand
depends on skill, expertise and experience
of person making forecast
• Method is useful for forecasting demand of
established product
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Sales force opinion
• Expected sales is estimated by distributors
survey through questionnaire or can be
requested from retail outlet
• Company’s sales force can also give
estimation of future demand
• Many company heavily rely on judgment
made by their sales personnel
• But this judgment may suffer from over
optimism or over pessimism
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Delphi technique
• It can make more realistic forecast
• A panel of experts are asked sequential
question and from responses new
questionnaire is produced.
• Opinions are collected from experts to
arrive at reliable results
• Each questionnaire demands a detailed
opinion from each expert and then these
opinions are summarized to get result
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Time series methods
• Time series refers to past data arranged in
chronological order as a dependent variable
and time as independent variable for ex.
Year
1994
1995
1996
1997
Demand
20
30
40
58
• This is called time series. This method does
not study factors affecting demand. In this
method all factors that affect demand are
grouped into one factor ‘Time’ and demand is
expressed as a series of data with respect to
time
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Fitting Trend Line by
observation method
• The given time series data are plotted on a
graph paper by taking time on X-axis and
the other variable on Y-axis.
• A smooth line or curve, drawn through the
plotted points would represent the trend of
the given data.
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Least Square method
(Regression Analysis)
• In regression analysis relation between
dependent variable (y) and independent
variable (x) can be expressed by equation:
Y=a+bX
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Moving Average
• Past data can have fluctuations because of
seasonal variation and random variation
• Averaging the demand for previous period
is going to hide the trend
• MA consists series of arithmetic means
calculated from overlapping groups of
successive elements of time series.
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• The period of moving average should be
carefully selected
• Wrongly selected period will distort data.
• Longer the period of M.A. greater is the
smoothing effect
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Moving Average continue…
• Each moving average is based on values
covering a fixed time interval, called ‘period
of moving average’ and is shown against
centre of the period.
• For the time series values Y1, Y2, Y3,…
the moving average for period n is given as
follows:
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Moving average continue….
• 1st value of M.A.= 1/n (Y1+Y2+Y3+…+Yn)
• 2nd value of M.A.=
1/n(Y2+Y3+Y4+…+Yn+1)
• 3rd value of M.A. =
1/n (Y3+Y4+Y5+…+Yn+2)
And so on…..
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Continue….
• When period of M.A. is odd the successive
values of the moving average are placed
against the middle period.
• For ex. If n=7 then first moving average is
placed against 4th value, the second
moving average is placed against 5th value
and so on.
• If the period of M.A. is even then centering
method is used
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