1. Marketing Management

1. 1. Marketing Management • After carefully studying this chapter, you should be able to: • Define marketing; • Explain the marketing concept; • Describe how marketing is organised; • Explain how to monitor environment.

2. Preface • Marketing is based on a concept– which is an idea, a basis, a focus. • Marketing: exchangevalue for value • Why do organisations need marketing?

3. 1.1 Marketing defined • Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably. • Source: The British Chartered Institute of Marketing

4. 1.1.1 Profit • Profit: revenue is larger than costs • Loss: costs are higher than revenue • Other benefits: some organisations get their funds without selling • Charities • Schools

5. 1.1.2 Exchange • Both parties feel happy with a fair exchange. • Examples of exchanges: A exchange this for this • Housewife $1.5 Fresh fruit for the family • Greengrocer Fresh fruit Profit of 30cents • Small boy Washing dad’s car Meal in Burger King • Father $3.0 (for meal) Clean car without any effort • Disabled person Gratitude Help • Helper Time Feel-good factor

6. 1.1.3 Alternative concepts • Different people/departments in an organisation might have different thinking. • Not everyone is concerned about marketing. • There are other concepts that exist in an organisation.

7. Production • The production concept is based on the ability of an organisation to make certain products, or to supply certain services. • Usually a production concept lasts only as long as there is a monopoly.

8. Sales • The sales concept is based only on the selling of goods and services. • The focus is on selling, without any interest in what is best for the person who ends up with the goods. Hard selling When the sales person presses for an order without taking account of the needs of the person buying.

9. Financial concept • The financial concept is based on costs. It tends to be an inward-looking, low risk approach. • The key is not to lose money. Therefore managers want proposals that are guaranteed to be successful.

10. But different from the above, marketers: • always work into the future • always look for opportunities • cannot ever guarantee a result • forecast on experience and probability

11. 1.2 Organising for marketing • Every organisation has to be divided into functions if it is to operate effectively. • A typical commercial organisation has the following functions:

12. Management Hierarchy Managing Director Finance Production Marketing Distribution DirectorDirector Director Director Personnel Director/Manager Buying New product (procurement) development

13. What does the finance team do? • This team look after money issues, and will be responsible for: • Capital • Revenue • Purchases • Credit Control • Costing

14. What does the production team do? • This team is responsible for everything that the organisation makes, including: • Factory management • Manufacture • Storage • Within production will often be found: • Buying / procurement • New Product Development (NPD)

15. What does the Personnel team do? • The Personnel department is sometimes called the Human Resources department, and is for: • Recruiting • Selecting • Training

16. What does the distribution team do? • To channel goods from the manufacturer to the customer (PDM, Physical Distribution Management), and: • Running depots, transport fleets, etc. • Selecting distribution methods • Planning efficient methods of distribution • Storing and moving goods • Making deliveries to customers • Collecting returned goods

17. What does the marketing team do? • This team is: • responsible for customer and consumer contact • the only part of the organisation that has a direct contact with the market • the bridge to the customer

18. Marketing: the bridge to the customer Communication Goods/services Marketer Consumer Cash (or similar benefit) Information

19. 1.3 Marketing in Different industries and sectors • Fast moving consumer goods (FMCG) • Individual sales tend to be in small quantities • People need to buy regularly • A high level of repeat business • Prices tend to be low, and profits small • The large volume of small profits adds up to a large overall profit (薄利多銷) • Trusted branded products bring returning customers and profits.

20. Consumer durables • Normally for the home, but will last a reasonable time in use • Each product tends to have a relatively high price • Fewer products are sold • But the profit on each is higher than on FMCG • Repeat business is important, but buying is not very frequent • Length of life in use is an important buying point

21. Capital goods • Needs large investment • Potential customers are very few • Each customer can be identified and contacted • Big decisions; time is taken; big projects • Potential competitors and their products will be known • Potential profits will be high • Repeat business is possible, but not frequent • Reputation will be important

22. Small budget organisations • Marketing on a small budget forces tight targeting, and a creative use of ideas and funds • Big organisations might have small marketing budget • Marketers with small budget need to plan very carefully to produce maximum return • The example of charities…

23. Business to business (B2B) marketing • In fact, it is to market to the individuals working for those businesses. • Organisational buying is normally • well structured • in large quantity • Repeat business can extend over many years • Getting a new order might represent the start of a long-term business relationship.

24. 1.4 Environmental issues • Organisations, like individuals, exist in the real world - a world full with STEEPLE factors • Social and cultural • Technological and product innovation • Economic and market conditions • Education, training and employment • Political • Legal • Environmental protection

25. 1.5 Legislation and codes of conduct • Legislation • This is the law of the land, and has to be complied with. • Codes of conduct • Professional bodies create a code of conduct that sets out how their member should behave. • Services set out codes of behaviour to cover what is acceptable. • e.g.: BCAP (the British Code of Advertising Practice)