Introduction to Marketing Management

 Introduction to Marketing Management 

“Marketing is a process by which individuals and group obtain what they need and want through creating and exchanging products and value with others”

                                                                                                                                                          -Philip Kotler.

“Marketing is the performance of business activities that directs flow of goods and services from producer to consumer”

                                                                                          - American Marketing Associations.

Marketing Management is an art and science of choosing target markets and building profitable relationship with them. This involves getting, keeping, growing    customers through creating, communicating, and delivering superior customer value.”

                                                                                                             -Philip Kotler.

MARKETS:

-Markets is set of actual and potential buyers of a product.

-Size of the market depends on market need, buying power, and interest to exchange for a purpose.

CUSTOMER AND CONSUMER:

-Customer is a person or company who buys the products for usage of others.

-Consumer is the end users of the product.

MARKETS –TYPES

1. CONSUMER MARKETS:

-Consist of individual who buys products for their own use.

-Companies spend more amount for creating brand awareness, brand image, brand loyalty among consumers.

2. BUSINESS MARKETS:

-Known as industrial markets.

-Usually used to buy raw material, manufacturing materials, machineries, for manufacturing of products for consumers. Includes resellers also.

3. INSTITUTIONAL MARKETS:

-These are nonprofit organizations like schools, colleges, churches and other charitable organizations.

4. GOVERNMENT MARKETS:

-It includes buyers from sate and central government.

-Usually purchased through tenders.

5. GLOBAL MARKETS:

-Markets out of home country.

-Entry through licensing, franchising, contract, constructing manufacturing unit.

-Difference in language, culture monetary systems, trade barriers act as a major challenges.

6. META MARKETS:

-Is a market with a group of companies which are lined to common platform to make an ease for purchase Eg: olix.in

MARKETING FUNCTIONS PERFORMED ON SIX BASIC CONCEPTS:

1. PRODUCTION CONCEPT-

  -Consumers will favour the product that is readily available at reasonable prices.

  -Increase in production and distribution efficiency will be the main focus for the management.

2. PRODUCT CONCEPT-

  -Consumers will favour product that are offered mosty in quality, quantity, performance and innovative features.

  -Continuous improvement product and quality are essential for companies.

3. SELLING CONCEPT:

-Consumers will not buy product unless it undergoes high selling and promotional effect.

4. MARKETING CONCEPT:

-Understanding customer needs and wants is the primary objectives.

-Focus on customer and value is considered.

-Selling concept focuses on companies existing products, and calls for heavy selling and promotional efforts.

-Focus on customer for short term sales.

5. CUSTOMER CONCEPT:

-Companies are moving from marketing to customer concept.

-Companies offers special advantages to preferred customers based on their requirements

6. SOCIETAL MARKETING CONCEPT:

-Is about consideration on setting three marketing policies.

1. Company profits.

2. Consumer wants.

 3. Society interest.             

                                         MARKETING ENVIRONMENT

“A company’s marketing environment consist of actors and forces outside marketing that affect management’s ability to build and maintain successful relationship with target customers”

                                                                                                                                                              -  Philip Kotler

-Marketing environment composed of micro and macro environment.

-Microenvironment consists of actors close to the company the affect the ability to serve its customer.

-Macro environment consist of forces that affect the macro environment.

 

MICROENVIRONMENT                                        MACROENVIRONMENT

1. Company                                                                               1.Demographic

2. Suppliers                                                                                          2.Economic

3. Marketing intermediaries                                                                  3.Natural

4. Customers                                                                                      4.Technological

5. Competitors                                                                               5.Political

6. Public                                                                               6.Legal

                                                                                                                 7. Cultural

MICROENVIRONMENT:

1. Company:

  -In organization marketing managers has to coordinate with all other departments to enhance smooth functioning of the organization in order to better value and satisfaction to the customer.

2. Suppliers:

-In organization suppliers forms the major part by supplying raw materials to the company for manufacturing of goods.

-Suppliers play an important role in value delivery system. hence to enhance smooth delivery process suppliers has to be treated like partners.

Labour strikes, price variations will affect the relationship between the two and delivering value to the customer.

3. Marketing intermediaries:

-These include middlemen, distribution firms, marketing services agencies, financial intermediaries.These intermediaries help in promoting, selling, and distributing goods and services to the buyers.

4. Customers:

-Includes buyers of the company’s product. Customers include consumers, industries, and government markets.

-Markets keep on changing and tastes and preferences of the customer also changing.

-Survival in the market will depend on regular understanding of customer needs and wants.

-Customer switchover is high if the company does not delver right kind of product and service.

5. Competitors:

-Understanding of competitor’s strategy will help in preparing plans for competition.

-Gaining competitive edge is build when the strength and weakness of the competitors markets are really understood.

6. Public:

-Company should take very keen interest on public by implementing CSR  in all aspects on business from its overall profit.

MACRO ENVIRONMENT:

1. Demographic Environment:

-Marketers are interested in size of the population, interested in geographic distributions, density, mobility trends, age distributions, birth, marriage, death rates, racial,ethnic and religious structure.

-Marketers have to keep track of changing age and family structures, population shifts, Educational characters tic and population diversity.

2. Economic environment:

-Marketers have to keep track of economic trends prevailing in the market. buying power, current income level,prices,saving and credit availability.

 -Monetary policy changes, interest rates, business cycles, change in income level are the major factor that affect marketing decisions.

3. Natural environment:

Marketers have to be aware of raw materials, increased pollutions, increased governmental interventions in natural resource management.

4. Technological environment:

Marketers should be aware of technological trends and should able to identify which technologies will help to build customer satisfaction.  Eg. Mobile apps for shopping.

5. Political environment:

Marketers should be aware of government adopted by the country and political stability prevails in the country. Political government consists of laws, government agencies, pressure groups, that influence organizations in an given society.Changing government agency enforcement and growth of public interest groups also bring biggest threats and challenges.

6. Legal environment:

Marketers have to work with legal forces prevailing in the country. There are legal regulations on products, prices, distributions, and promotions.Maketers have to understand legal environment and adapt to its forces.

7. Cultural environment:

Cultural environment is made up of institutions and forces that affect society basic values, perception, preferences and behaviours. Culture is the unified result factors like religion, language, education and family environment.

 

REASONS WHY COMPANIES GO GLOBAL:

1. To find new market for the product-Market expansion

2. Profit maximization

3. Competitors.

GLOBAL FIRM:

Is a firm that operates in more than one country and gains all R&D, production, Marketing, and financial advantages in its cost, and reputations, that are not available to purely to domestic competition.

LOOKING AT THE GLOBAL MARKETING ENVIRONMENT:

Before going global company has to decide its global marketing strategy. that includes:

1. International Trade system.-

International trade barriers,

1. Tariffs

2. Non Tariff Trade barriers

3. Exchange rate controls.

 SOME FACTORS ALSO FAVOUR TO ENTER INTO FOREIGN COUNTRIES:

-GATT (General Agreement on Trade and Tariff)-designed to promoter world trade by reducing tariffs and international trade barriers.

The General Agreement on Tariffs and Trade (GATT) was a multilateral agreement regulating international trade. According to its preamble, its purpose was the "substantial reduction of tariffs and other trade barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis." It was negotiated during the United Nations Conference on Trade and Employment and was the outcome of the failure of negotiating governments to create the International Trade Organization (ITO). GATT was signed in 1947 and lasted until 1994, when it was replaced by the World Trade Organization in 1995.

1. Regional Free Trade Zones.

-Group of nations organized to work towards common goals in the regulations of international trade.

2. Economic Environment:

-Marketers have to study the economic environment of the company in a very detailed fashion

Two factors should be studied:

Industrial distribution.-which shapes companies product, service, income levels, employment levels.

4 Types Of Industrial Distributions Are,

1. Subsistence economics-

   - Includes people engage in agriculture

   -  Opportunities are low for this market

2. Raw material exporting economies-

 -Economies which are well very rich in specific natural resources

-Opportunities for luxury goods are high.

 3. Industrializing economies-

-These are growing economics where production of goods and services are growing.

-Need increases gradually

4. Industrial economies-

-Major exporters of manufactured goods

-Rich in power and money

-Favours good market for marketers.

 B.INCOME DISTRIBUTION

-Income level of goods is very high in industrialized economics and where as low in subsistence economics .But the needs for goods are common in all economics.

Political environment:

-Decisions regarding whether to do business in that country. Factors to be considered are attitude towards international trade, government policies and regulations, political stability and monetary regulations. Countertrade also practiced in today’s marketing context-exchanging of goods.

Cultural environment:

Companies has to understand how culture affects marketing environment

 Impact of culture on marketing strategy-

Companies have to identify the culture of the people and how do they use the products before deciding marketing strategy.

 -Understanding cultural traditions, preferences, and behavior can help companies.

Impact of marketing strategy on culture-

-There has been an major issue that companies are making a great impact in changing lifestyle of the people.

DECIDING WHETHER TO GO GLOBAL:

On analyzing the market environment internationally marketers decide whether to go globally .saturization of the market and booming of competitors in the local markets will make the companies to find a suitable place for their products hence deciding to go global is in the hands of marketers by analyzing various factors.

                                                              

 DECIDING HOW TO ENTER THE MARKET:

Once company has decided to global it has to decide its global entry strategies.

 A. Exporting-

-Simplest way to enter the market

-Selling the goods to other company market by exporting.

-Indirect exporting-exporting through intermediaries.

 - Direct exporting-handling exports with no intermediaries.

B.Joint Venturing-

-Joining with foreign companies to market products or services

-An association is formed with the foreign country partners

4 types –

LICENSING      -

-Is the simple way to enter into other companies market.

-Companies enter into an agreement with the parties to use the companys manufacturing Process, trademark, patent, trade secreat, or other item of value.

-Less risk of entering into the market.

Diadv:

1. Less control over the licensee

2. When the contract ends it has its own competitors.

Contract manufacturing:

     -The company contracts its production or service with the manufacturer in foreign countries.

Disadv:

1.Loss of control over its manufacturers and process

Adv:

-Easy to enter with less risk

MANAGEMENT CONTRACTING:

A joint venture in which the domestic firms supplies the management the facilities that are required to perform the operations. Management Contract: A "fast-track" procurement method in two stages. In the first stage, the management contractor obtains tenders for each work element from works contractors (who would be subcontractors under traditional procurement). In the second stage the management contractor enters into works contracts (subcontracts) with the works contractors in order to carry out and complete the works. The two stages naturally overlap. The employer pays the management contractor a management fee on top of the "prime cost" of the works.

The main weakness of the system is that if defects occur the employer can recover damages from the management contractor only to the extent that the management contractor can recover damages from the works contractor.

 Joint ownership:

In joint ownership or venture company joins investors in a foreign market to create local business in which a company shares a joint ownership and control.

Direct investment:

Setting up of manufacturing or assembly units in foreign market by investing their money.

High risk prevails around the company like falling markets, currencies, government changes.

DECIDING ON GLOBAL MARKETING PROGRAM:

-decisions based on whether to go with slandered marketing mix or adapted marketing mix.

-Standard marketing mix is using the same product, advertising, distributions channel, and other mix elements in international markets.

-Adapted mix elements marketers adjust the marketing mix element according to each target market.

PRODUCT:

-Straight product extension –no change in product.

-Product adaptation-adapting the product to the local market conditions.

-Product invention-creating a new products for specific country.

-Communication adaptation-changing communication according to local market conditions.

-Dual adaptations-adapting both product and communication according to local market conditions.

Price:

-Set a uniform price everywhere

-Set a market-based price in each country

-Set a cost-based price in each country

-International Pricing Approaches

Export Pricing - a price is set for by the home-based marketing managers for the international market. The pricing approach is based upon a whole series of factors which are driven by the influences on pricing listed above. Then mainstream approaches to pricing may be implemented - see below.

Non-cash payments - less and less popular these days, non-cash payments include counter-trade where goods are exchanged for goods between companies from different parts of the World.

Transfer Pricing - prices are set in the home market, and goods are effectively sold to the international subsidiary which then attaches its own margin based upon the best price that local managers decide that they could achieve. Then mainstream approaches to pricing may be implemented.

Standardization versus adaptation - common approach to pricing in each market.

Distribution channel

DECIDING ON GLOBAL MARKETING ORGANIZATIONS:

Decisions based on where to organize the following   control process,

1. Export department

2. International division

3. Geographical organizations

4. World product groups

5. International subsidiaries

 

ADVANTAGES AND DISADVANTAGES OF GLOBAL MARKETING:

Advantages:

-Economies of scale

-Lower marketing costs

-Power and scope

Consistency in brand image

-Ability to leverage

-Uniformity of marketing practices

Disadvantages:

-Differences in consumer needs, wants, usage patterns

-Differences in consumer response to marketing mix

-Differences in brand development process

-Differences in environment

Export department

-International division

-Geographical organizations

-World product groups

-International subsidiaries