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MANAGEMENT - II

MANAGEMENT - II. Chapter # 1 Marketing Management Prepared by Anurag Pal. ‘Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’ Kotler 1991. SOME BASIC CONCEPTS.

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MANAGEMENT - II

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  1. MANAGEMENT - II Chapter # 1 Marketing Management Prepared by Anurag Pal

  2. ‘Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’Kotler 1991

  3. SOME BASIC CONCEPTS • NEED • Needs are basic and necessary requirements of human beings, with out fulfillment of which life will not be possible. • For example food, shelter, clothing

  4. SOME BASIC CONCEPTS 2. Wants • Those needs which are not basic in nature, but if we get them life becomes full of comforts A human need which is shaped by culture and individual. i.e. I want a Coca Cola. I want kebab.

  5. SOME BASIC CONCEPTS 3 Demand • Demand is the willingness to pay and ability to pay for the satisfaction of needs and wants.

  6. Want Buying Power This is Demand “Demand”

  7. SOME BASIC CONCEPTS • Product • A product may be a good, service, place or an idea. So all tangible and intangible attributes which can satisfy human wants are product.

  8. SOME BASIC CONCEPTS • Market Market means, “The people or organizations with needs to satisfy, money to spend and willingness to spend money”. • A market is a place where buyer and seller met together.

  9. WHY MARKETING….? • In order to fulfill the needs and wants, the buyers have a lot of options to purchase a particular product. • For example. if you want to purchase a sim card you can go for Roshan, Etisalat and MTN, etc similarly if you want to purchase burger, you can have it from KFC, AFC or any other restaurant in Kabul city.

  10. What is Marketing? Marketing is a total system of business activities designed to plan product price, promote, and place (distribute) want-satisfying product to target markets in order to achieve oganizational objectives.

  11. Definitions of marketing ‘Marketing is the management process that identifies and satisfies customer requirements profitably’ The Chartered Institute of Marketing

  12. ‘Marketing is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others’Kotler 1991

  13. Marketing MixThe “Four P’s” P roduct P ricing P P lace (Distribution) romotion

  14. Marketing MixThe “Four P’s” • The Marketing Mix The strategy (Planning) of designing the combination of products where and when it is distributed, how it is promoted and at what price. TargetMarket Product Pricing Place Promotion

  15. Place Product Price Promotion The Four P`sThe Four C`s Marketing Mix Conven- ience Customer Solution Customer Cost Communication

  16. Market Segmentation & Target Marketing Market Segmentation Dividing a market into customer categories Target Marketing Selecting a category of customers with similar wants and needs who are likely to respond to the same products

  17. Market Segmentation: Divide the market into segments of customers Target Marketing: Select the segment to develop Segmentation and Target Marketing #1 #2

  18. Marketing Management Philosophies • Consumers favor products that are • available and highly affordable. • Improve production and distribution. • Consumers favor products that offer • the most quality, performance, and • innovative features. • Consumers will buy products only if • the company promotes/ sells these • products. • Focuses on needs/ wants of target • markets & delivering satisfaction • better than competitors. • Focuses on needs/ wants of target • markets & delivering superior value. Production Concept Product Concept Selling Concept Marketing Concept Societal Marketing Concept

  19. Design a customer-driven marketing strategy Marketing Concept • There are five alternative concepts under which organization designs and carry out marketing strategies. ( the production concept-the product concept-selling concept- the marketing concept-the social marketing concept) 1 The Production Concept The idea that consumers will favor products that are available and highly affordable and that the organization should therefore focus on improving production and distribution efficiency.

  20. The product Concept The idea that consumers will favor products that offer the most quality, performance, features and that the organization should therefore dedicate its energy to making continuous product improvement. 3 The Selling Concept The idea that consumers will not buy enough of the firm’s products unless it undertakes a large scale selling and promotion effort.

  21. Design a customer-driven marketing strategy cont... 4 Marketing Concept The marketing management philosophy that achieving organizational goal depends on knowing the needs and wants of target markets and delivering the desired satisfaction better than competitors do. 5 The Social Marketing Concept The company should make good marketing decisions by considering consumers long run interests, and society long run interests.

  22. Company Orientations Towards the Marketplace Consumers prefer products that are widely available and inexpensive Production Concept • Consumers favor products that offer performance, most quality, or innovative features Product Concept Consumers will buy products only if company aggressively promotes/sells these products Selling Concept Focuses on needs/ wants of target markets & delivering value better than competitors Marketing Concept

  23. Performance Expectation Performance Expectation 8 10 10 8 Value and Satisfaction If performance is lower than expectations, satisfaction is low. If performance is higher than expectations, satisfaction is high.

  24. Customer Value • Customer value = customer benefits–customer costs Customer benefits Anything desired by the customer that is received in an exchange Customer costs Anything a customer gives up in an exchange for benefits

  25. The Marketing Concept MARKETING CONCEPT Customer orientation + Coordinated marketing activities Customer satisfaction Organizational success + Organization’s performance objectives +

  26. Societal Marketing Concept Society (Human Welfare) Societal Marketing Concept Consumers (Wants) Company (Profits)

  27. Demand forecasting • Purposes of forecasting Purposes of short-term forecasting • Appropriate production scheduling. • Reducing costs of purchasing raw materials. • Determining appropriate price policy • Setting sales targets and establishing controls and incentives. • Evolving a suitable advertising and promotional campaign. • Forecasting short term financial requirements. Purposes of long-term forecasting • Planning of a new unit or expansion of an existing unit. • Planning long term financial requirements. • Planning man-power requirements.

  28. Demand forecasting • A forecast is a prediction or estimation of future situation under given conditions • Demand forecasting is different from demand estimation in the sense that forecasting predicts about future trends of sales while estimation tries to find out expected present sales level.

  29. Demand forecasting continue….. • Passive forecast: where prediction about future is based on assumption that firm does not change the course of its action • Active forecast: where forecasting is done under the condition of likely future changes in the actions by a firm

  30. Purpose of forecasting • Short run forecast: seasonal patterns are more important. It helps in preparing sales policy, price policy, production planning to avoid under and over stock conditions. • Long run forecast: it is helpful for capital planning.

  31. Methods of forecasting Methods of forecasting Opinion Polling method Statistical method consumer’s survey fitting trend line method sales force opinion least square method expert’s opinion moving average exponential smoothing

  32. Opinion survey/consumer’s survey • Relatively simple and practicable method for forecasting demand of new products • Opinions are collected from prospective buyers regarding their future consumption • Sampling technique is used to survey customers • From sample it is possible to forecast demand of targeted population

  33. Expert’s opinion • In this method expert’s opinion is sought on the future demand for product • It is biased and subjective • The accuracy of predicted demand depends on skill, expertise and experience of person making forecast • Method is useful for forecasting demand of established product

  34. Sales force opinion • Expected sales is estimated by distributors survey through questionnaire or can be requested from retail outlet • Company’s sales force can also give estimation of future demand • Many company heavily rely on judgment made by their sales personnel • But this judgment may suffer from over optimism or over pessimism

  35. Delphi technique • It can make more realistic forecast • A panel of experts are asked sequential question and from responses new questionnaire is produced. • Opinions are collected from experts to arrive at reliable results • Each questionnaire demands a detailed opinion from each expert and then these opinions are summarized to get result

  36. Time series methods • Time series refers to past data arranged in chronological order as a dependent variable and time as independent variable for ex. • This is called time series. This method does not study factors affecting demand. In this method all factors that affect demand are grouped into one factor ‘Time’ and demand is expressed as a series of data with respect to time

  37. Fitting Trend Line by observation method • The given time series data are plotted on a graph paper by taking time on X-axis and the other variable on Y-axis. • A smooth line or curve, drawn through the plotted points would represent the trend of the given data.

  38. Least Square method (Regression Analysis) • In regression analysis relation between dependent variable (y) and independent variable (x) can be expressed by equation: Y=a+bX

  39. Moving Average • Past data can have fluctuations because of seasonal variation and random variation • Averaging the demand for previous period is going to hide the trend • MA consists series of arithmetic means calculated from overlapping groups of successive elements of time series.

  40. The period of moving average should be carefully selected • Wrongly selected period will distort data. • Longer the period of M.A. greater is the smoothing effect

  41. Moving Average continue… • Each moving average is based on values covering a fixed time interval, called ‘period of moving average’ and is shown against centre of the period. • For the time series values Y1, Y2, Y3,… the moving average for period n is given as follows:

  42. Moving average continue…. • 1st value of M.A.= 1/n (Y1+Y2+Y3+…+Yn) • 2nd value of M.A.= 1/n(Y2+Y3+Y4+…+Yn+1) • 3rd value of M.A. = 1/n (Y3+Y4+Y5+…+Yn+2) And so on…..

  43. Continue…. • When period of M.A. is odd the successive values of the moving average are placed against the middle period. • For ex. If n=7 then first moving average is placed against 4th value, the second moving average is placed against 5th value and so on. • If the period of M.A. is even then centering method is used

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