Marketing Management – I CBCBA5T07

Syllabus topics (RTMNU)

• Introduction to Marketing and Marketing Management
• Marketing Concepts
• Marketing, Nature, Scope and importance of marketing
• Traditional and modern marketing
• Marketing mix
• Marketing Environment

Introduction to Marketing and Marketing Management

Marketing — Definition: Philip Kotler defines marketing as "a social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others." In simple words, marketing is all the activities used to find out what customers want, make the right product, price it, promote it and deliver it to them at a profit.

Marketing Management — Definition: Marketing management is the art and science of choosing target markets and getting, keeping and growing customers through creating, delivering and communicating superior customer value (Kotler). It means planning, organising, directing and controlling all marketing activities.

Marketing Concepts

A marketing concept is the philosophy that guides a firm's marketing. They developed in this order:

1. Production concept: customers want products that are cheap and easily available; focus on mass production (e.g. early Hindustan Ambassador era).
2. Product concept: customers want the best quality; focus on improving the product.
3. Selling concept: customers will not buy enough unless pushed; focus on aggressive selling and advertising.
4. Marketing concept: find out customer needs first and satisfy them better than competitors; "make what you can sell".
5. Societal marketing concept: satisfy customers while also protecting the long-term welfare of society and the environment (e.g. eco-friendly packaging).
6. Holistic marketing concept: modern view — relationship marketing, integrated marketing, internal marketing and socially responsible marketing together.

Nature of Marketing

1. Customer-oriented: starts and ends with the customer.
2. Continuous process: research, product, price, promotion and feedback go on all the time.
3. Exchange process: value is exchanged between buyer and seller.
4. Goal-oriented: earns profit through customer satisfaction.
5. Both art and science: uses creativity as well as research and data.
6. Dynamic: changes with technology, fashion and competition.
7. Applies to everything: goods, services, ideas, places and persons.

Scope of Marketing

Scope means the areas covered by marketing: (1) what is marketed — goods, services, events, experiences, persons, places, organisations, information and ideas; (2) marketing activities — marketing research, product planning, branding, packaging, pricing, distribution, warehousing, transport, promotion, selling and after-sales service; (3) types — consumer, industrial, rural, international, digital and services marketing.

Importance of Marketing

1. To the firm: brings revenue and profit, helps survival and growth, gives market information.
2. To consumers: wider choice, better quality, information and convenience.
3. To society: raises standard of living, creates employment (salesmen, transporters, advertisers).
4. To the economy: increases demand, which increases production, investment and national income; promotes exports.

Traditional and Modern Marketing

Marketing Mix

Definition: The marketing mix is the set of controllable marketing tools that a firm blends to get the desired response from the target market. Neil Borden used the term; E. Jerome McCarthy grouped it as the 4 Ps.

1. Product: features, quality, design, brand, packaging, warranty.
2. Price: list price, discounts, credit terms.
3. Place: channels of distribution, coverage, stock, transport.
4. Promotion: advertising, sales promotion, personal selling, publicity, digital marketing.

For services, three more Ps are added (7 Ps): People, Process and Physical evidence.

Marketing Environment

Definition: The marketing environment is the set of outside and inside forces that affect a firm's ability to build relationships with its customers.

1. Micro environment (close to the firm): the company itself, suppliers, marketing intermediaries (dealers, transporters, banks), customers, competitors and publics (media, government, local public).

2. Macro environment (wider forces — remember PESTLE + demographic):

• Demographic: population size, age, urbanisation — India's young population.
• Economic: income, inflation, GDP growth, interest rates.
• Political-legal: government policy, Consumer Protection Act 2019, GST.
• Social-cultural: values, festivals, lifestyle, health awareness.
• Technological: internet, UPI, e-commerce, AI.
• Natural/ecological: pollution rules, ban on single-use plastic, climate.

Likely exam questions

1. (Long, 8/16 marks) Define marketing. Explain its nature, scope and importance.
2. (Long, 8/16 marks) What is marketing environment? Explain the micro and macro environmental factors affecting marketing.
3. (Short, 4 marks) Explain the societal marketing concept.
4. (Short, 4 marks) Distinguish between traditional and modern marketing.
5. (Short, 4 marks) What are the 4 Ps of the marketing mix?

Syllabus topics (RTMNU)

• Market segmentation
• Importance and Bases for segmentation
• Market Targeting
• Various Targeting Strategies
• Positioning
• De-Positioning and Repositioning

STP: Segmentation, Targeting and Positioning

Modern marketing follows three steps called STP: first divide the market (Segmentation), then choose the groups to serve (Targeting), and then build a clear image in their minds (Positioning). A firm cannot satisfy everyone, so STP helps it focus.

Market Segmentation — Meaning

Definition: Market segmentation is the process of dividing a large, mixed (heterogeneous) market into smaller groups of buyers who have similar needs, characteristics or behaviour, so that each group can be served with a separate marketing mix.

Example: Maruti Suzuki sells Alto for budget buyers, Swift/Baleno for young middle-class buyers and Grand Vitara for premium SUV buyers.

Requirements of good segments: measurable, substantial (large enough to be profitable), accessible (can be reached), differentiable and actionable.

Importance of Market Segmentation

1. Better understanding of customers: needs of each group are studied closely.
2. Right marketing mix: product, price and promotion suit each segment.
3. Efficient use of resources: money is spent where returns are highest.
4. Finding new opportunities: unserved segments are discovered (e.g. sachet shampoos for rural India).
5. Competitive advantage: a firm can lead in its chosen segment.
6. Customer satisfaction and loyalty increase.
7. Helps in product design and pricing decisions.

Bases for Segmentation

Market Targeting

Definition: Market targeting is the process of evaluating each market segment's attractiveness and selecting one or more segments to serve.

Segments are judged on: (1) size and growth, (2) structural attractiveness (competition, substitutes, power of buyers and suppliers), (3) company objectives and resources.

Various Targeting Strategies

1. Undifferentiated (mass) marketing: one product and one marketing mix for the whole market, ignoring differences. E.g. basic salt, sugar.
2. Differentiated (segmented) marketing: separate offers for several segments. E.g. HUL soaps — Lifebuoy (health), Lux (beauty), Dove (premium care).
3. Concentrated (niche) marketing: a big share of one small segment; suits small firms. E.g. luxury watches, organic food brands.
4. Micro-marketing: tailoring to local markets or individuals — local marketing and individual (one-to-one) marketing, e.g. personalised offers on Amazon/Flipkart.

Positioning

Definition: Positioning is the act of designing the company's offer and image so that it occupies a clear, distinctive and desirable place in the minds of target customers (Kotler).

Bases of positioning: product attributes (Volvo — safety), benefits (Colgate — cavity protection), price/quality (Big Bazaar — value), use or occasion (Bournvita — growing children), user (Dettol — family hygiene), against a competitor, and cultural symbols.

Steps: identify possible competitive advantages → choose the right advantage → select an overall positioning strategy → communicate and deliver the position. A positioning statement and a USP (Unique Selling Proposition) help.

De-positioning and Repositioning

De-positioning: changing the way customers see a competitor's product, usually by pointing out its weakness, so that the firm's own product looks better. E.g. comparative ads by detergent or toothpaste brands.

Repositioning: changing the position of the firm's own product in customers' minds, because sales are falling, tastes have changed, or a new segment is attractive. E.g. Cadbury Dairy Milk moved from a "children's chocolate" to a chocolate for all ages and celebrations; Horlicks targeted adults and women with new variants.

Likely exam questions

1. (Long, 8/16 marks) What is market segmentation? Explain its importance and the bases of segmenting consumer markets.
2. (Long, 8/16 marks) What is market targeting? Explain the various targeting strategies with examples.
3. (Short, 4 marks) Define positioning.
4. (Short, 4 marks) Distinguish between de-positioning and repositioning.
5. (Short, 4 marks) State the requirements of effective market segmentation.

Syllabus topics (RTMNU)

• Product Strategy
• Product Classification
• Product Mix
• Product Line Strategies
• Product Life Cycle
• Product planning – New product development
• Sources of New Product idea
• Steps in Product Development
• Product branding

Product — Meaning

Definition: A product is anything that can be offered to a market for attention, acquisition, use or consumption that might satisfy a want or need (Kotler). It includes physical goods, services, persons, places, organisations and ideas. Product strategy means the decisions a firm takes about its products: what to make, how many varieties, how to brand and when to change.

Product Classification

A. Consumer products (bought for personal use):

• Convenience products: bought often, quickly, with little effort — soap, toothpaste, biscuits.
• Shopping products: compared on price, quality and style before buying — clothes, mobile phones, furniture.
• Speciality products: unique brands for which buyers make special effort — Rolex watch, a designer saree.
• Unsought products: customers do not normally think of buying — life insurance, fire extinguisher.

B. Industrial products (bought for further production or business use): materials and parts (raw materials, components), capital items (machinery, buildings), supplies and services (lubricants, repair, consultancy).

Products are also classified by durability: durable (TV, fridge), non-durable (milk, soap) and services.

Product Mix

Definition: Product mix (product assortment) is the set of all product lines and items that a company offers for sale.

Dimensions: Width — number of product lines; Length — total number of items; Depth — number of versions of each product (sizes, flavours); Consistency — how closely the lines are related in use, production or distribution. Example: ITC has lines like foods (Aashirvaad, Sunfeast, Bingo), personal care (Fiama, Vivel), stationery (Classmate) and hotels.

Product Line Strategies

A product line is a group of closely related products. Strategies:

• Line stretching — downward: adding cheaper items (a premium brand launching a low-price model).
• Upward stretching: adding premium items (Maruti adding Nexa models).
• Two-way stretching: both up and down.
• Line filling: adding more items within the present range (new flavours, sizes).
• Line pruning: dropping weak or loss-making items.
• Line modernisation: updating the design and features of the line.
• Line featuring: highlighting one or two items to attract buyers.

Product Life Cycle (PLC)

Definition: The product life cycle is the course of a product's sales and profits over its life, passing through four stages.

Product Planning — New Product Development

A new product may be an original product, an improved or modified product, or a new brand. New products are needed for growth, to meet changing tastes, to use spare capacity and to fight competition.

Sources of new product ideas: customers (complaints and suggestions), employees and the R&D department, competitors' products, dealers and salespeople, suppliers, research institutes and universities, trade fairs, the internet and social media, and top management.

Steps in Product Development

1. Idea generation — collecting many ideas from all sources.
2. Idea screening — dropping poor ideas early.
3. Concept development and testing — describing the idea and testing it with target customers.
4. Marketing strategy development — target market, positioning, price, distribution, budget.
5. Business analysis — estimating sales, costs and profits.
6. Product development — making a prototype.
7. Test marketing — launching in a small, realistic market.
8. Commercialisation — full-scale launch: when, where, to whom and how.

Product Branding

Brand — Definition: A brand is a name, term, sign, symbol, design or a combination of these, which identifies the goods or services of one seller and differentiates them from competitors. A brand registered under the Trade Marks Act, 1999 becomes a trademark.

Advantages: easy identification, builds loyalty, allows premium price, helps advertising, legal protection, easy launch of new products. Branding strategies: individual brand names (HUL — Lux, Rin), family/umbrella brand (Tata, Amul), brand extension (Dettol soap from Dettol antiseptic), multi-brands and private labels (retailer brands of supermarket chains). Qualities of a good brand name: short, easy to pronounce and remember, suggests the benefit, legally protectable.

Likely exam questions

1. (Long, 8/16 marks) What is product life cycle? Explain its stages and the marketing strategies used at each stage.
2. (Long, 8/16 marks) What is new product development? Explain the sources of new product ideas and the steps in product development.
3. (Short, 4 marks) Explain the dimensions of product mix.
4. (Short, 4 marks) What is a brand? State its advantages.
5. (Short, 4 marks) Explain any two product line strategies.

Syllabus topics (RTMNU)

• Pricing Methods and Strategies
• Pricing Strategies: Cost-Based, Value-Based, and Competitive Pricing
• Psychological Pricing and Dynamic Pricing
• Factors influencing pricing policy

Price and Pricing — Meaning

Price is the amount of money charged for a product or service; it is the value a customer gives in exchange for the benefits of the product. Pricing is the process of fixing that price. Price is the only element of the marketing mix that brings in revenue; the other three create costs. A pricing strategy is the overall plan a firm follows to set and change prices to reach its objectives (profit, market share, survival, image).

Pricing Methods and Strategies

Pricing methods are grouped by what the price is based on: cost, customer value or competition. Special strategies like psychological and dynamic pricing are used on top of these. New-product strategies are also common:

• Skimming pricing: a high price at launch to "skim" profit from buyers ready to pay more, then lower it — e.g. new flagship smartphones.
• Penetration pricing: a low price at launch to capture a large market quickly — e.g. Jio's free/low-cost data in 2016.
• Product-line, bundle and discount pricing — price steps across models, combo packs, seasonal sales.

1. Cost-Based Pricing

Meaning: price is fixed by adding a margin to the cost of the product.

• Cost-plus (mark-up) pricing: Price = Cost per unit + a fixed percentage of profit. E.g. cost ₹200 + 25% mark-up = ₹250.
• Target return pricing: price that gives a desired rate of return on investment.
• Break-even pricing: price at which total revenue equals total cost; Break-even units = Fixed cost ÷ (Price − Variable cost per unit).
• Marginal cost pricing: price covers variable cost plus some contribution; used for extra orders or exports.

Merits: simple, fair, assures cost recovery. Demerits: ignores demand and competition and what customers are willing to pay.

2. Value-Based Pricing

Meaning: price is fixed on the basis of the value the customer perceives, not on cost. The firm first studies what customers are willing to pay, then designs the product and cost to fit that price. E.g. Apple iPhone, Titan and Tanishq jewellery, branded medicines. Variants: good-value pricing (right mix of quality and price, like D-Mart's "everyday low price") and value-added pricing (adding features and service to justify a higher price).

Merits: higher profit, customer focus. Demerits: perceived value is hard to measure; needs research.

3. Competitive (Competition-Based) Pricing

Meaning: price is fixed mainly by looking at competitors' prices.

• Going-rate pricing: charging about the same as competitors — petrol, cement, steel.
• Above-market pricing: for a strong brand image.
• Below-market pricing: to attract price-sensitive buyers.
• Sealed-bid (tender) pricing: quoting in government tenders, based on expected bids of rivals.

4. Psychological Pricing

Meaning: pricing that uses the psychology of buyers, not just economics.

• Odd (charm) pricing: ₹499 instead of ₹500 — looks much cheaper.
• Prestige pricing: a high price signals high quality — luxury perfumes.
• Reference pricing: showing the "MRP ₹1,999, now ₹999" to make the offer look attractive.
• Price lining: a few fixed price points — ₹299, ₹499, ₹799 shirts.
• Buy-one-get-one, festival offers that create a feeling of a bargain.

5. Dynamic Pricing

Meaning: prices change continuously according to demand, time, customer and supply, usually with software and data. Examples: airline and railway Tatkal/premium tatkal fares, Uber/Ola surge pricing, hotel room rates, e-commerce price changes during sales. Merits: maximises revenue, uses capacity. Demerits: customers may feel cheated; legal and ethical concerns about unfair prices.

Factors Influencing Pricing Policy

A. Internal factors:

• Marketing objectives: survival, profit, market share or quality leadership.
• Costs: fixed and variable costs set the lower limit.
• Marketing mix strategy: price must fit with product, place and promotion.
• Product life cycle stage and product differentiation.
• Organisation: who decides prices.

B. External factors:

• Demand and customers: elasticity of demand and buyers' paying capacity set the upper limit.
• Competition: prices and offers of rivals.
• Economic conditions: inflation, recession, income levels.
• Government policy: GST, price controls on essential medicines (NPPA under the Drugs Price Control Order), MRP rules under the Legal Metrology Act — check latest.
• Suppliers and intermediaries: raw material prices and dealer margins.
• Social and ethical considerations.

Likely exam questions

1. (Long, 8/16 marks) Explain cost-based, value-based and competitive pricing methods with their merits and demerits.
2. (Long, 8/16 marks) Explain the internal and external factors influencing the pricing policy of a firm.
3. (Short, 4 marks) What is psychological pricing?
4. (Short, 4 marks) Explain dynamic pricing with examples.
5. (Short, 4 marks) Distinguish between skimming and penetration pricing.