Module Title:

Marketing Management

Instructor: Dr. Bogale A.

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 Chapter One

Introduction
to
Marketing Management
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Dr. Bogale A. 2
 Issues to Address
• Overviews of Marketing
• Marketing Philosophies
• Marketing Environment
• Marketing Strategies
• Relationship Marketing
• Marketing Mix
• Managing Sales Force

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 Introduction
• Competing in today’s economy means finding ways to break
out of commodity status to meet customers’ needs better than
competing firms.
• All organizations—both for-profit and non-profit— require
effective planning and a sound marketing strategy to do this
effectively.
• Without these efforts, organizations would not be able to satisfy
customers or meet the needs of other stakeholders.
• For example, having an effective marketing strategy allows
Apple to develop popular products, such as the iPhone, iPod,
and its MacBook line of notebook computers.

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 Continued...

• This and other organizations use sound

marketing strategy to leverage their
strengths and capitalize on opportunities that
exist in the market.

• How organizations plan, develop, and

implement marketing strategies is the focus of
this course.
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 The Challenges and Opportunities
of Marketing in Today’s Economy

• Traditional ideas about marketing strategy began to change forever

during the mid- 1990s.

• Advances in computer, communication, and information technology

forever changed the world and the ways that marketers reach
potential customers.

• Considering these fundamental changes to marketing and business

practice, as well as to our own personal buying behaviour, the major
marketing challenges and opportunities in the new economy
include;
Dr. Bogale A.
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 Continued...

 A shift in power to customers caused by increased

access to information.

 A massive increase in product selection due to line

extensions and global sourcing.

 Greater audience and media fragmentation as

customers spend more time with interactive media
and less time with traditional media.
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 Continued....

 Changing customer perceptions of value and

frugality.
 Shifting demand patterns for certain product
categories, especially those delivered digitally.
 Increasing concerns over privacy, security, and
ethics.
 Unclear legal jurisdictions, especially in global
markets.
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 What Is Marketing?

• Almost every marketing textbooks has a different

definition of the term “marketing”.
• The better definitions are however focused upon
customer orientation and satisfaction of customer need.
• The American Marketing Association (AMA) uses the
following: “Marketing is an organizational function and
a set of processes for creating, communicating, and
delivering value to customers and for managing
customer relationships in ways that benefit the
organization and its stakeholders.”
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 Continued...

 Philip Kotler Uses, “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.”

 The Chartered Institute of Marketing (CIM),

“Marketing is the management process that identifies,
anticipates and satisfies customer requirements
profitably.”
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 Continued...

• We can distinguish between a social and a managerial definition of marketing.

• A social definition shows the role marketing plays in society.

 Here is a social definition that serves our purpose: “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.”

 For a managerial definition, marketing has often been described as "the art of
selling products," but people are surprised when they hear that the most
important part of marketing is not selling! Selling is only the tip of the marketing
iceberg.

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 Continued...

• Peter Drucker, a leading management theorist, puts it this way:

 The aim of marketing is to know and understand the customer so well that
the product or service fits him and sells itself.

• Ideally, marketing should result in a customer who is ready to buy. All that
should be needed then is to make the product or service available.

• When Sony designed its Play Station, when Gillette launched its Mach III
razor, and when Toyota introduced its Lexus automobile, these
manufacturers were swamped with orders because they had designed the
"right" product based on careful marketing homework.
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 Core Marketing Concepts

 A. Needs, Wants and Demand:

 Need: is a state of felt deprivation.
- It can be basic need, social need, individual need.
- When a need is not satisfied, a person will do one of two things:
1. Look for an object that will satisfy it; or
2. Try to reduce the need.
 Wants: when needs directed to specific object.
- It is affected by culture and personality.

- A hungry person in Ethiopia may want ‘injera’.

- Wants are described in terms of objects that will satisfy needs.

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13A.
 Cont’d

• Demand: When want is backed up by an

ability and willingness to pay/buy that is
purchasing power, wants become demand

 Marketers can influence demand by making the

product affordable and attractive.

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 B. Product

• A product is anything that can be offered to a market to

satisfy a need or want.
• Products can be tangible or intangible.
Tangible Products: Products that we can touch.
Products having Physical substance and intrinsic
monetary value.
Example: Radio, television, Refrigerator....
Intangible products: Products not having physical
substance.
Example: bank, hotel, transport.......
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 C. Value, satisfaction and quality
 Customer Value: is the difference between the values
the customer gains from owning and using a product
and the costs of obtaining the product.

 Customers often do not judge product values and

costs accurately or objectively. They act on perceived
value.
 Customers perceive the firm to provide faster, more
reliable delivery and are hence prepared to pay the
higher prices.

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 Cont’d
• Customer satisfaction: is the extent to which the
products perceived performance matches a buyers
expectation.
– If the products performance is less than consumers
expectation, it is dissatisfaction.
– If the product performance is higher than
customers expectation, it is over satisfaction or
delight.
– If the products performance is equal to consumers
expectation, it is satisfaction.
• It is closely related with quality

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 Quality

 In narrowest sense, quality can be defined as

“freedom from defect”.
 But most customer-centred companies go beyond
this narrow definition of quality. Instead, they
define quality in terms of customer satisfaction.
 Customer-focused definitions of quality suggest
that a company has achieved total quality only
when its products or services meet or exceed
customer expectations.
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 D. Exchange, transaction and relationship

Exchange: is the process of obtaining a product

from someone by offering some thing in return.
 For exchange potential to exist, five conditions must
be satisfied:
1. There are at least two parties
2. Each party has something valuable to the other
party.
3. Each party is capable of communication and
delivery.

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 Cont’d

4. Each party has a freedom to accept or reject the exchange

offer.
5. Each party must believe that it is appropriate and desirable
to deal with the other party.
 Whether exchange actually takes place depends up
on whether the two parties can agree on terms of
exchange that will leave them better off (or at least not
worse of) than they were before exchange.
 It is a value creating process because exchange
normally leaves both parties better off.

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 Transaction

 Two parties are engaged in exchange if they are

negotiating and moving toward an agreement. When
an agreement is reached we say that transaction is
takes place.
 Transaction is trading of values between two or more
parties. It can take a form of monetary or barter
transaction.
 In Transaction we must be able to say “A gave X to B
and receive Y in return”.
 A transfer differs from exchange in that, in transfer A
gives X to B but does not receive anything in return.
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 Relationship Marketing

• It is building long-term relationships with

consumers, distributors, dealers, and
suppliers.
• Smart marketers work at building long-term
relationships with stake holders.
• Ways of creating good relation with stake
holders are promising and consistently
delivering high-quality products, good service
and fair prices.
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 E. Market

It is a set of actual and potential buyers of a

product.
These buyers share a particular need or want
that can be satisfied through exchange.
Originally the term market stood for the place
where buyers and sellers gathered to exchange
their goods, such as a village square.
Economists use the term to refer to a collection
of buyers and sellers who transact in a particular
product class, as in the housing market or the
grain market.
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 Cont’d

 Marketers, however, see the sellers as constituting

an industry and the buyers as constituting a market.
 The relationship between the industry and the market
is shown in Figure 1.
 The sellers and the buyers are connected by four
flows. The sellers send products, services and
communications to the market; in return, they
receive money and information. The inner loop
shows an exchange of money for goods; the outer
loop shows an exchange of information
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 Fig. 1: Simple Marketing System

Communication

Goods/services
Industry Market
(a collection (a collection
of sellers) Money of Buyers)

Information
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 Summary of core concepts of Marketing

Figure 2. Core marketing concepts

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 Who Markets?

• MARKETERS AND PROSPECTS A marketer

is someone who seeks a response (attention, a
purchase, a vote, a donation) from another
party, called the prospect.

• If two parties are seeking to sell something to

each other, we call them both marketers.

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 Cont’d...

• Marketers are skilled in stimulating demand for

a company's products, but this is too limited a
view of the tasks they perform.

• Just as production and logistics professionals

are responsible for supply management,
marketers are responsible for demand
management.
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 Cont’d...

• Some times marketing management is

considered as demand management.
• At any time, there may be no demand, irregular
demand or too much demand.

• Marketing managers seek to influence the level,

timing, and composition of demand to meet the
organization's objectives.
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 Cont…
• Demand exists in different states, and in each state there
exist different marketing tasks.
• The eight states of demand and the tasks are;
1. Negative demand: This is a state in which all or the major
parts of the society, dislikes the product and may even pay
a price to avoid it.
The marketing task is conversional marketing; -
analyzing why the market dislikes the product
- product redesign
- lowering price
- more positive promotion
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 Cont…
2. No demand- This is a case where customers may be
uninterested or have no awareness about the
product.
 Marketing managers are concerned with creating
awareness.
 It can be done by encouraging consumers to test the
product.
 This marketing task is known as stimulation
marketing.
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 Cont…
3. Latent demand - when customers share a
strong need for a product that does not exist in
the market.
 The marketing manager has to measure the
size of the potential market and trying to
develop a new product that would satisfy the
demand.
 This marketing task is called developmental
marketing.
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 4. Declining demand
 Is a condition where demand is falling due to different
reasons like
Weak marketing programs
Fierce competition
High price etc…
 The marketing task is reversing the declining demand
by using mechanisms like
Finding new target markets
Lowering prices
Changing the product features
Developing more effective communication
 This task is called remarketing.
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 5. Irregular demand-

 It is a state in which the timing pattern of

demand is marked by seasonal and volatile
fluctuations causing problems of idle capacity.
 The right marketing task is synchro-
marketing, i.e., to find ways to alter the
pattern of demand through flexible pricing,
promotion and other incentives.
DD

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TimeA. 34
 Cont’d…
6. Full demand – when the amount of demand and
the amount the firm can handle is equivalent.
Example:
The marketing task is maintenance marketing,
and is designed to maintain the current level of
demand against changing consumer preferences.
 maintains quality, and
 continually measures satisfaction
 Product improvement
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 Cont…
7. Overfull demand- it is a state in which
demand is higher than the company can or
wants to handle.
 The marketing task is called de-marketing and
it involves finding ways to reduce the demand
temporarily:
 Raising prices and
Reducing promotion and
Reducing services.
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 Cont’d…
8. Unwholesome demand- the demand for unhealthy or
dangerous product.
The corresponding marketing task is known as
counter marketing it is to get people give up usage of
such product.

Marketing manager should

-should replace by another product via market
research.
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 Cont’d…

- communicate the right information about such

products.

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 Marketing management philosophies

• It is an orientation or understanding or assumption

about consumer behaviour and management strategy.
• There are five alternative concepts under which
organizations conduct their marketing activities:
1. The production concept
2. Product concept
3. Selling concept
4. Marketing concept and
5. Societal marketing concepts.
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05/11/2024 Dr. Bogale A. 40
 Cont’d…
1. The production concept
• The production concept is one of the oldest
concepts guiding sellers.
• This concept holds that consumers will favor
those products that are widely available and
affordable /low in price.
• Therefore, that management should focus on
improving production and distribution
efficiency.
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41A.
 Cont…
The concept works when:
 The demand for a product exceeds supply.
 In developing countries.
 If the product cost is too high.
 The company wants to expand its market.

The problem with this concept:

 Do not give attention for quality.

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42A.
 cont’d…
2.The product concept
• It assume that consumers will prefer those products
that offer the most quality, performance & features.
• Here companies often design their product with little
or no customer input; this leads to marketing
myopia.

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43A.
 Cont…
3. The Selling concept
• Holds that consumers will not buy enough of
the organization's products unless it undertakes
a large-scale selling and promotion effort.
• Under this philosophy, marketing managers
assume that consumers purchase products if
the organization undertakes an aggressive
selling and promotion effort.
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44A.
 Cont’d....

• The concept is typically practiced with

unsought goods - those that buyers do not
normally think of buying, such as insurance,
encyclopedias and funeral plots.
• Their aim is to sell what they make rather than
make what the market wants.

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 Cont…

Most firms practice the selling concept,

 when they introduce new products.
 when they have over capacity.

The problem with this concept

 It creates dissatisfaction on customers.
 Do not give consideration for long term
relation.
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46A.
 Cont…

4. The Marketing Concept

• Focuses on determining the needs and wants of
target markets and delivering satisfaction more
effectively and efficiently than competitors do.
• Delivering satisfaction better than competitors.

What are the differences between marketing and

selling concept?

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47A.
 Difference b/n selling and marketing concepts

. Selling concept Marketing concept

This is a good idea Let’s find out what the people want

Lets make some Lets analyze the demand

Let’s make 1000 units Let’s find out how many they want

Let’s charge 2 birr each Let’s find out how much they will pay.

Now let’s try to sell them Let’s decide if it is profitable

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 Cont’d
.

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 5. Social Marketing Concept
• It is the recent concept compared to the others.
• Focuses on determining the needs and wants of target markets
and delivering superior value than the competitors in a way
that maintains or improves the consumer's and the society's well-
being.
• This concept suggests marketers to balance three
considerations in setting their marketing policy.
• These considerations are;
 Company Profit
 Customers wants / needs
 Society’s interest (long term)
• This concept calls up on marketers to build social and ethical
consideration in to their marketing practice.
• Society’s well-being.
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50A.
 Three considerations underlying the societal marketing concept

. Society
Human welfare

Societal marketing
concept

Consumer Company
(want satisfaction) (profit)
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Major Marketing Activities and Decisions

• Organizations must deal with a number of

activities and decisions in marketing their
products to customers.
• These activities vary in both complexity and
scope.
• All marketing activities have one thing in
common: They aim to give customers a reason
to buy the organization’s product.
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 Cont’d...

• Major marketing activities and decisions

include;
 Strategic and tactical planning.
 Social responsibility and ethics.
 Research and analysis.
 Developing competitive advantages and a
strategic focus for the marketing program.

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 Cont’d...

Marketing strategy decisions related to,

market segmentation and target marketing,
the product,
pricing, distribution, and
promotion, which will create competitive
advantages over rival firms).

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 Cont’d...

Implementing and controlling marketing

activities.
 Developing and maintaining long-term
customer relationships, (including a shift from
transactional marketing to relationship
marketing).

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Taking on the Challenges of Marketing Strategy

• One of the greatest frustrations and opportunities

in marketing is change –
 customers change,
 competitors change, and
 even the marketing organization changes.
• Strategies that are highly successful today will
not work tomorrow.

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 Cont’d...

• Customers will buy products today that they

will have no interest in tomorrow.
• These are truisms in marketing.
• Although frustrating, challenges like these also
make marketing extremely interesting and
rewarding.
• Life as a marketer is never dull.

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 Cont’d...

• Some of the challenges involved in developing

marketing strategy include;
 Unending change—customers change, competitors
change, and even the marketing organization
changes.
 The fact that marketing is inherently people-driven.
 The lack of rules for choosing appropriate marketing
activities.

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 Cont’d...

The basic evolution of marketing and business

practice in our society.
 The increasing demands of customers.
 An overall decline in brand loyalty and an
increase in price sensitivity among customers.

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 E E ND !
TH

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