Business 2005

1. WHAT IS MARKETING?

DEFINITION OF MARKETING

Marketing management represents one of the most critical functions in many organizations.

According to the American Marketing Association:

"Marketing is the process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives." (1)

Marketing Management entails analysis, planning, implementation, and control of activities designed to develop and maintain a beneficial exchange of ideas, products, and services in the marketplace to meet personal and corporate goals.

One of the most notable experts on marketing management, Philip Kotler, defines Marketing as:

"A social and managerial process by which individuals and groups obtain what they need and want through creating and exchanging products and value with others". (2)

In a simplified manner, illustrated below, the Marketing Process may be presented as a flow of products and services from product and service providers through market intermediaries to the end-users, in exchange for money.

THE FLOW OF PRODUCTS AND SERVICES IN THE MARKETPLACE

Product And Service Providers

Market Intermediaries

End-Users

2. WHAT ARE THE BASIC MARKETING CONCEPTS?

Some of the Basic Marketing Concepts are summarized below. (3)

THE BASIC MARKETING CONCEPTS

• A Market.

A market is represented by individuals and organizations, who are or may become buyers for specific products and services.

• A Marketplace.

A marketplace is a specified geographic location which contains a number of existing and potential buyers of products and services.

• Needs.

These include basic physical needs for water, food, shelter, closing, safety; social needs for recognition, belonging to a group, affection; individual needs for self-expression and achievement; organizational needs expressed by groups of people or businesses.

• Wants.

Wants may be expressed by products or services which may be desirable by individuals or organizations to meet their specific individual or organizational needs.

• Demands.

Demands for products or services may be expressed by an individual, a group of individuals or organizations, backed by their respective buying power in the marketplace.

• Products And Services.

Products and services are designed to satisfy the needs, wants, and demands of broad range of individuals and organizations in the marketplace.

• Customer Value.

A customer value is the difference between the value the customer receives by owning and using a particular product or service and the actual cost of purchasing such product or service.

• Customer Satisfaction.

A customer satisfaction is expressed by the buyer of a product or service based on the degree to which such product or service meets the customer's expectations.

• Transaction.

A transaction is an exchange or trade of a product or a service between a buyer and a seller, based on mutually agreed terms and conditions, including price, method of delivery, terms of payment, and warranty.

3. WHAT ARE THE BASIC MARKETING MANAGEMENT GUIDELINES?

IMPORTANCE OF THE BASIC MARKETING MANAGEMENT GUIDELINES

It is important to adhere to the Basic Marketing Management Guidelines designed to ensure mutual satisfaction and positive results for both - the marketing organizations and the customers alike. Some of the basic marketing management guidelines for marketing organizations are outlined below. (4)

THE BASIC MARKETING MANAGEMENT GUIDELINES

1. To Provide The Producers And Consumers With A Freedom Of Choice.

The western-type market economy is driven by a dynamic market demand and is regulated by the principle of supply and demand in the marketplace. The cornerstone of this principle is the freedom of choice which may be exercised by marketers and consumers alike. Marketers, therefore, should remember that both parties are free to act in their best interests to achieve their organizational or individual objectives.

2. To Satisfy The Basic Needs Of Marketing Organizations And Consumers.

Marketing organizations and consumers have a broad range of specific needs that must be identified, evaluated, and fulfilled in the free-market economy. Marketers, therefore, should be aware of the importance of satisfying their respective basic needs, since a long-term business relationship can not succeed without a short-term mutual satisfaction.

3. To Avoid Any Discrimination In The Marketing Process.

The marketing organizations should not discriminate against consumers for any reason. Marketers should offer their products and services on a equal basis to all consumers, irrespective of their status, religion, race, buying power, or any other unrelated characteristic. Marketers should remember, that only a discrimination-free market environment will secure a steady and profitable business performance.

4. To Provide Cost-Effective Products And Services To Consumers.

The marketing system aims at supplying products and services to customers in the marketplace, based on high quality and low, or competitive price. Free economy relies on active competition and informed buyers who stimulate the market efficiency. Marketers should, therefore, offer their products and services to consumers on a cost-effective basis to ensure long-term commercial success.

5. To Offer Product And Service Innovation To Consumers.

The competitive market environment stimulates the producers to develop new products and services which are better and more efficient in their performance. At the same time this process also stimulates a continuous reduction of various related costs, such as costs of raw materials, manufacturing, packaging, assembly, or distribution. Marketers, therefore, should be prepared to improve the features and quality of their products and services and at the same time to reduce costs to ensure long-term commercial success.

6. To Educate And Inform The Consumers.

The competitive marketing environment also stimulates a continuous educational process of consumers in the marketplace with an objective to secure a long-term effective use of products and services and overall customer satisfaction. Marketers, therefore, should be prepared to educate and inform the consumers on a continuous basis to secure a long-term viability of their products and services.

7. To Offer Continuous Product And Service Protection To Consumers.

There is a trend in the modern marketing environment toward maximizing consumer
protection in terms of possible harm which may be caused by various products and services supplied by marketers. In addition, there are various laws and regulations, imposed by the government to maximize product safety and to prevent deceptive marketing and sales practices. Marketers, therefore, should be prepared to spend additional funds to maximize the consumer protection in the marketplace and to minimize the potential harm to consumers.

4. THE CONNECTION BETWEEN MARKETING MANAGEMENT AND SALES MANAGEMENT

THE CONNECTION BETWEEN MARKETING
MANAGEMENT AND SALES MANAGEMENT

Many business practitioners often confuse Marketing Management with Sales Management. Although these two functions are strongly interrelated, they do differ in purpose and description.

Harvard professor Theodore Levitt defines the difference between these two functions as follows:

"Selling focuses on the need of the seller; marketing on the needs of the buyer. Selling is preoccupied with the seller's need to convert his product into cash; marketing with the idea of satisfying the needs of the customer by means of the product and the whole cluster of things associated with the creating, delivering and finally consuming it". (5)

A well-known management expert, Peter F. Drucker, suggests that:

"Selling and marketing are antithetical rather than synonymous or even complementary. There will always, one can assume, be a need for some selling, but the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well the product or service fits him and sells itself." (6)

5. WHAT IS THE MARKETING MANAGEMENT PROCESS?

THE MARKETING MANAGEMENT PROCESS

The most important task of a marketing manager is to initiate the Marketing Management Process and develop a marketing department within the organization.
The planning and control of the marketing management process entails a number of steps, as outlined below.

STEPS IN THE MARKETING MANAGEMENT PROCESS

Step 1: Gather And Collate Marketing Information.

Step 2: Examine Strategic Marketing Factors.

Step 3: Evaluate The Existing Situation In The Marketplace.

Step 4: Formulate The Company's Marketing Objectives.

Step 5: Identify Suitable Marketing Segments.

Step 6: Measure And Forecast Market Potential.

Step 7: Select A Suitable Marketing Strategy.

Step 8: Develop A Detailed Marketing Mix Strategy.

Step 9: Prepare A Marketing Plan.

Step 10: Summarize The Marketing Budget.

Step 11: Implement, Evaluate And Control Marketing Activities.

6. STEP 1: GATHER AND COLLATE MARKETING INFORMATION

GATHER AND COLLATE MARKETING INFORMATION

The marketing management process begins with the gathering and collating of Marketing information.

Good market intelligence provides a sound foundation for an effective marketing plan and helps the company to achieve its overall business objectives. It is essential, therefore, to develop a strong market intelligence team and to utilize appropriate Sources Of Marketing Information. Some of these sources are outlined below.

SOURCES OF MARKETING INFORMATION
No.	Details
1	Commercial and trade publications.
2	Statistical data.
3	Reports from sales employees.
4	Market research bureaus.
5	Internet.
6	Information provided by the existing customers.

7. STEP 2: EXAMINE STRATEGIC MARKETING FACTORS

EXAMINE STRATEGIC MARKETING FACTORS

Examination of Strategic Marketing Factors entails evaluation of internal and external factors, or marketing variables, related to the company's overall business activities in the marketplace.

A thorough examination of the Internal And External Marketing Factors plays a vital role in the development of an effective marketing plan. Several important internal and external marketing factors are outlined below.

INTERNAL MARKETING FACTORS
No.	Details
1	Company's size, strengths, weaknesses.
2	Company's organizational and management structure.
3	Company's corporate plans and objectives.
4	Company's products or services.

EXTERNAL MARKETING FACTORS
No.	Details
1	Current market demand for company's products or services.
2	Influence of competition in the marketplace.
3	Legal requirements.
4	Technological developments.
5	Economical conditions in the marketplace.
6	Political conditions in the marketplace.

8. STEP 3: EVALUATE THE EXISTING SITUATION IN THE MARKETPLACE

EVALUATE THE EXISTING SITUATION IN THE MARKETPLACE

Comprehensive examination of relevant strategic marketing factors enables the marketing manager to complete the evaluation of the Company's Existing Position In The Marketplace. Such an evaluation plays a highly important role in the overall marketing plan development process.

The evaluation of the company's existing position in the marketplace entails providing answers on a number of important questions, as outlined below.

THE COMPANY'S POSITION IN THE MARKETPLACE
No.	Details
1	How successful is our company in the marketplace in terms of market penetration with our products or services at present?
2	How do customers rate our company in terms of the product or service quality?
3	How popular are our products or services in the marketplace?
4	How strong is the competition in the marketplace?
5	How do we differ from our main competitors?
6	What is the short-term market trend in the area of product or service acceptance?

9. STEP 4: FORMULATE THE COMPANY'S MARKETING OBJECTIVES

FORMULATE THE COMPANY'S MARKETING OBJECTIVES

Upon evaluating the company's position in the marketplace, the marketing manager will be in a better position to complete the formulation of the company's Marketing Objectives for the forthcoming fiscal period.

The formulation of the company's marketing objectives entails finding answers on a number of important questions, as outlined below.

The formulation of Marketing Objectives is discussed in details later in Tutorial 5.

THE COMPANY'S MARKETING OBJECTIVES
No.	Details
1	What specifically do we want to accomplish in the marketplace during the next fiscal period?
2	What new products or services do we need to introduce to maintain our competitive advantage in the marketplace?
3	What products or service do we need to phase out during the next fiscal period?
4	How much additional capital do we need to support our short-term marketing plan?
5	How should we develop our sales team to meet our marketing plan objectives

10. STEP 5: IDENTIFY SUITABLE MARKETING SEGMENTS

IDENTIFY SUITABLE MARKETING SEGMENTS

After formulating marketing objectives, the marketing manager must proceed with the process of identification of suitable Marketing Segments, where the company may have a marketing opportunity to offer its products or services.

Marketing Opportunity represents a suitable field of marketing action where a company may have a potential trading advantage. Each feasible marketing opportunity should be viewed more closely to establish a suitable method of entering into a specific market.

Identification of suitable marketing segments entails finding answers on a number of important questions, as outlined below. This process will also help the marketing manager in the overall process of marketing plan implementation and development of an appropriate sales team.

Market Segmentation And Targeting are discussed in details later in Tutorial 5.

SUITABLE MARKETING SEGMENTS
No.	Details
1	In which market segments are our products or services most successful at present?
2	In which market segments may our company have an additional business advantage during the next fiscal period?
3	How successful are our products and services in the consumer markets?
4	How successful are our products or services in the commercial markets?
5	How successful are our products or services in the government markets?

11. STEP 6: MEASURE AND FORECAST MARKET POTENTIAL

MEASURE AND FORECAST THE MARKET POTENTIAL

There are many different Market Segments where a company may identify sound business opportunities. These segments, known as Target Markets, must be classified according to their industrial activity and grouped into separate target market areas. This will enable the marketing manager to summarize the most suitable target markets, to complete the Measurement And Forecasting Of Market Potential, and to provide answers on a number of important questions, as outlined below.

Subsequently, the Sales Potential of each area should be evaluated and the most suitable market opportunities selected in accordance with the company's capabilities to gain and maintain a marketing advantage.

Market Measurement And Forecasting is discussed in details later in Tutorial 5.

THE MARKET POTENTIAL
No.	Details
1	What is the market potential for our products or services in a specified market segment in the consumer market in terms of units sold?
2	What is the market potential for our products or services in a specified market segment in the commercial market in terms of dollar value?

12. STEP 7: SELECT A SUITABLE MARKETING STRATEGY

SELECT A SUITABLE MARKETING STRATEGY

Once the marketing manager has evaluated the company's existing position, formulated appropriate objectives, and identified and measured target markets, it is necessary to proceed with the selection of a suitable Marketing Strategy.

There are five basic marketing strategies that can be selected by a company in terms of its overall marketing objectives, as illustrated below.

Various Marketing Strategies are explained in detail later in Tutorial 5.

FIVE BASIC MARKETING STRATEGIES


New Venture Strategy		Growth Strategy		Market Development Strategy		Market Retention Strategy		Balancing Strategy

13. STEP 8: DEVELOP A DETAILED MARKETING MIX STRATEGY

DEVELOP A DETAILED MARKETING MIX STRATEGY

The next stage of the marketing management process involves development of a Detailed Marketing Mix Strategy.

The Marketing Mix will be defined later as a combination of four important elements, as illustrated below.

The development of a marketing mix strategy will require the marketing manager to formulate the four comprehensive strategies. Each element of the Marketing Mix Strategy is explained later in Tutorial 5 in terms of the overall marketing strategy of the company.

THE FOUR "P" MARKETING MIX