Production & Marketing

Management
Module 3
By
Dr. Kiran Kumar Thoti

The Importance of Marketing

Financial success often depends on marketing ability.
Finance, operations, accounting, and other business
functions will not really matter if there is not sufficient
demand for products and services so the company can make
a profit.
The companies at greatest risk are those that fail to
carefully monitor their customers and competitors and to
continuously improve their value offerings. They take a
short-term, sales-driven view of their business and
ultimately, they fail to satisfy their stockholders, their
employees, their suppliers, and their channel partners.
Skilful marketing is a never ending pursuit.

The Scope of Marketing

To prepare to be a marketer, you need to understand what
marketing is, how it works, what is marketed, and who does
the marketing.
Marketing deals with identifying and meeting human and
social needs. One of the shortest definitions of marketing is
meeting needs profitably.
When eBay recognized that people were unable to locate
some of the items they desired most and created an online
auction clearinghouse or when IKEA noticed that people
wanted good furniture at a substantially lower price and
created knock-down furniture, they demonstrated marketing
savvy and turned a private or social need into a profitable
business opportunity.

The Scope of Marketing (Contd)

The American Marketing Association offers the following

formal definition :
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
stake holders.

What is Marketed ?
Marketing people are involved in marketing 10 types of
entities.
1) Goods
6) Places
2) Services
7) Properties
3) Experiences
8) Organizations
4) Events
9) Information
5) Persons
10) Ideas.

Marketing Environment
Micro Environment
1.Suppliers
2.Customers
3.Intermediaries
4.Competitors
5.Publics

Macro Environmen
1.Demographic
2.Economic
3.Physical
4.Technological
5.Political-Legal
6.Socio-Cultural

Information System
Information system is an organized
way of sending, receiving and
recording messages.
It includes
both formal flow of information and
informal flow of information. Nowa-days information is regarded as a
basic resource of a company along
with other resources like personnel,
materials, machines, and facilities.

Kotler has defined Marketing

Information System (MIS) as a
system that consists of people,
equipment, and procedures to
gather, sort , analyze, evaluate
and distribute needed, timely,
and accurate information to
marketing decision maker.

The
Marketing
Information
System has four sub-systems i.e.
Internal
records,
Marketing
Intelligence, Marketing research
and analysis of Information. The
sub-systems are interdependent
and interrelated so as to meet the
requirements
of
marketing
management.

Marketing
Management
Decisions
Product
Pricing
Place
Promotion
Packaging
People
Process
Physical
Evidence

Marketing
Information
System
Internal
Records

Marketing
Environment

Marketing
Intelligence

Target Markets
Competitors
Channels

Marketing
Research
Analysis of
Information

Marco
Environment

Levers of market segmentation

1.
2.
3.
4.

The starting point for discussing segmentation is mass marketing. In

mass marketing, the seller engages in the mass production, mass
distribution, and mass promotion of one product for all buyers. Ex. Cocacola also practiced mass marketing when it sold only one kind of Coke in
a
6.5
ounce
bottle.
The argument for mass marketing is that it creates the largest potential
market, which leads to the lowest costs, which in turn can lead to lower
prices
or
higher
margins.
Most companies are turning to micromarketing at one of four levels :
Segments
Niches
Local areas
Individuals

1. Segments
A market segment consists of a group of customers who share a
similar set of needs and wants. We must be careful not to
confuse a segment and a sector. A car company might say that it
will target young, middle-income car buyers.

The problem is that young, middle-income

car buyers will differ about what they want
in a car. Some will want a low-cost car and
others will want an expensive car. Young,
middle-income car buyers are a sector, not a
segment.

2. Niche Marketing
A niche is a more narrowly defined customer group seeking a
distinctive mix of benefits. Marketers usually identify niches by
dividing
a
segment
into
sub
segments.
For example Progressive, a Cleveland auto insurer, sells
nonstandard auto insurance to risky drivers with a record of
auto accidents, charges a high price for coverage and makes a lot
of money in the process.

3. Local Marketing
Target Marketing is leading to marketing programs tailored to
the needs and wants of local customer groups (trading areas,
neighborhoods,
even
individual
stores).
Citibank provides different mixes of banking services in its
branches, depending on neighborhood demographics. Kraft
helps supermarket chains identify the cheese assortment and
shelf positioning that will optimize cheese sales in low-,
middle-, and high-income stores, and in different ethnic
neighborhoods.

4. Individuals (Customerization)
The ultimate level of segmentation leads to segments of one,
customized marketing, or one-to-one marketing. Today
customers are taking more individual initiative in determining
what
and
how
to
buy.
More online companies today are offering customers a Choice
board, an interactive online system that allows individual
customers to design their own products and services by
choosing from a menu of attributes, components, prices, and
delivery options.

Segmenting Consumer Markets

Variables in Segmenting Market
1. Geographic Segmentation
2. Demographic Segmentation
3. Psychographic Segmentation
4. Behavioural segmentation