Activities and functions of marketing management

Definition of Marketing

According to a social definition, marketing is a societal process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products and services of value freely with others. As a managerial definition, marketing has often been described as “the art of selling products.” But Peter Drucker, a leading management theorist, says that “the aim of marketing is to make selling superfluous. The aim of marketing is to know and understand the customer so well that the product or service fits him and sells itself. Ideally, marketing should result in a customer who is ready to buy.”

 The American Marketing Association offers this managerial definition: Marketing (management) 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 goals.

Coping with exchange processes—part of this definition—calls for a considerable amount of work and skill. We see marketing management as the art and science of applying core marketing concepts to choose target markets and get, keep, and grow customers through creating, delivering, and communicating superior customer value.

Marketing Management Activities:

Marketing strategy

To achieve the desired objectives, marketers typically identify one or more target customer segments which they intend to pursue. Customer segments are often selected as targets because they score highly on two dimensions:

1) The segment is attractive to serve because it is large, growing, makes frequent purchases, is not price sensitive (i.e. is willing to pay high prices), or other factors; and

2) The company has the resources and capabilities to compete for the segment's business, can meet their needs better than the competition, and can do so profitably.[3] In fact, a commonly cited definition of marketing is simply "meeting needs profitably."

The implication of selecting target segments is that the business will subsequently allocate more resources to acquire and retain customers in the target segment(s) than it will for other, non-targeted customers. In some cases, the firm may go so far as to turn away customers who are not in its target segment. The doorman at a swanky nightclub, for example, may deny entry to unfashionably dressed individuals because the business has made a strategic decision to target the "high fashion" segment of nightclub patrons.

In conjunction with targeting decisions, marketing managers will identify the desired positioning they want the company, product, or brand to occupy in the target customer's mind. This positioning is often an encapsulation of a key benefit the company's product or service offers that is differentiated and superior to the benefits offered by competitive products. For example, Volvo has traditionally positioned its products in the automobile market in North America in order to be perceived as the leader in "safety", whereas BMW has traditionally positioned its brand to be perceived as the leader in "performance".

Ideally, a firm's positioning can be maintained over a long period of time because the company possesses, or can develop, some form of sustainable competitive advantage. The positioning should also be sufficiently relevant to the target segment such that it will drive the purchasing behavior of target customers. To sum up, the marketing branch of a company is to deal with the selling and popularity of its products among people and its customers, as the central and eventual goal of a company is customer satisfaction and the return of revenue.

Marketing management employs various tools from economics and competitive strategy to analyze the industry context in which the firm operates. These include Porter's five forces, analysis of strategic groups of competitors, value chain analysis and others. Depending on the industry, the regulatory context may also be important to examine in detail.

In competitor analysis, marketers build detailed profiles of each competitor in the market, focusing especially on their relative competitive strengths and weaknesses using SWOT analysis. Marketing managers will examine each competitor's cost structure, sources of profits, resources and competencies, competitive positioning and product differentiation, degree of vertical integration, historical responses to industry developments, and other factors.

Marketing management often finds it necessary to invest in research to collect the data required to perform accurate marketing analysis. As such, they often conduct market research (alternately marketing research) to obtain this information. Marketers employ a variety of techniques to conduct market research, but some of the more common include:

Ø Qualitative marketing research, such as focus groups and various types of interviews

Ø Quantitative marketing research, such as statistical surveys

Ø Experimental techniques such as test markets

Ø Observational techniques such as ethnographic (on-site) observation

Implementation planning

The Marketing Metrics Continuum provides a framework for how to categorize metrics from the tactical to strategic.

If the company has obtained an adequate understanding of the customer base and its own competitive position in the industry, marketing managers are able to make their own key strategic decisions and develop a marketing strategy designed to maximize the revenues and profits of the firm. The selected strategy may aim for any of a variety of specific objectives, including optimizing short-term unit margins, revenue growth, market share, long-term profitability, or other goals.

After the firm's strategic objectives have been identified, the target market selected, and the desired positioning for the company, product or brand has been determined, marketing manager focuses on how to best implement the chosen strategy. Traditionally, this has involved implementation planning across the "4 Ps" of : product management, pricing (at what price slot does a producer position a product, e.g. low, medium or high price), place (the place or area where the products are going to be sold, which could be local, regional, countrywide or international) (i.e. sales and distribution channels), and Promotion. Now a new P has been added making it a total of five P's. The fifth P is politics, which affects marketing in a significant way.

Taken together, the company's implementation choices across the 4(5) Ps are often described as the marketing mix, meaning the mix of elements the business will employ to "go to market" and execute the marketing strategy. The overall goal for the marketing mix is to consistently deliver a compelling value proposition that reinforces the firm's chosen positioning, builds customer loyalty and brand equity among target customers, and achieves the firm's marketing and financial objectives.

In many cases, marketing management will develop a marketing plan to specify how the company will execute the chosen strategy and achieve the business' objectives. The content of marketing plans varies from firm to firm, but commonly includes:

Ø An executive summary

Ø Situation analysis to summarize facts and insights gained from market research and marketing analysis

Ø The company's mission statement or long-term strategic vision

Ø A statement of the company's key objectives, often subdivided into marketing objectives and financial objectives

Ø The marketing strategy the business has chosen, specifying the target segments to be pursued and the competitive positioning to be achieved

Ø Implementation choices for each element of the marketing mix (the 4(5)Ps)

Project, process, and vendor management

More broadly, marketing managers work to design and improve the effectiveness of core marketing processes, such as new product development, brand management, marketing communications, and pricing. Marketers may employ the tools of business process reengineering to ensure these processes are properly designed, and use a variety of process management techniques to keep them operating smoothly.

Effective execution may require management of both internal resources and a variety of external vendors and service providers, such as the firm's advertising agency. Marketers may therefore coordinate with the company's Purchasing department on the procurement of these services. Under the area of marketing agency management (i.e. working with external marketing agencies and suppliers) are techniques such as agency performance evaluation, scope of work, incentive compensation and storage of agency information in a supplier database. Database is a critical thing to manage, but easy to allocate. While vendor allocation having complications to resolve but easy to handle.

Reporting, measurement, feedback and control systems

Marketing management employs a variety of metrics to measure progress against objectives. It is the responsibility of marketing managers – in the marketing department or elsewhere – to ensure that the execution of marketing programs achieves the desired objectives and does so in a cost-efficient manner.

Marketing management therefore often makes use of various organizational control systems, such as sales forecasts, sales force and reseller incentive programs, sales force management systems, and customer relationship management tools (CRM). Recently, some software vendors have begun using the term "marketing operations management" or "marketing resource management" to describe systems that facilitate an integrated approach for controlling marketing resources. In some cases, these efforts may be linked to various supply chain management systems, such as enterprise resource planning (ERP), material requirements planning (MRP), efficient consumer response (ECR), and inventory management systems.

Segmentation

Customers in a market vary widely in terms of their level and sophistication of need, in the way they would like the product to be delivered to them, in their ability and willingness to pay a certain amount for getting their needs satisfied, and their most preferred method of receiving communication from the company.

All customers in a market cannot be served by a single marketing mix. Although each customer is different from the other in some way or the other, it is not economically viable to have a tailored marketing mix for each customer.

Segmentation is the process of clubbing together similar customers in a group, so that they can be served by a marketing mix especially designed for the group or segment. A company can continue to segment its market into smaller and more homogeneous groups and design special marketing mixes for them.

The idea is that more homogeneous the segment, more appropriate will the marketing mix be for every customer in the segment. Segmentation can be used as a vehicle for entering a market. An entrant can segment the existing market in a way which is not being done by incumbents. The entrant can serve the carved out segment with an appropriate marketing mix.

Targeting:

Normally, in any market, there are many segments. A company may not have the resources and the capabilities to design marketing mixes to serve all the segments. A company will decide to serve one or more segments depending upon its capabilities and resources. The segments that a company chooses to serve by designing special marketing mixes are called target markets.

Positioning:

In most markets, there will be many companies providing the same basic solutions to customer needs. The customer has to select one provider among them. The offering of a company has to be distinct, so that customers are able to make a choice by matching their requirements with the offerings of various providers. Positioning is the process of creating a distinct offer and communicating it to the customer.

Positioning is created by designing a marketing mix which is suitable for the target market but is different from marketing mixes of other providers. The chosen marketing mix has to be then communicated to the customers.

The smaller and more homogeneous the target market is for which a marketing mix is designed, the stronger will be the positioning, i.e., the fit between the marketing mix of the company and requirement of the customers of the target market will be stronger. The process of positioning is continuous in nature and it should always be proactive because new needs and competitors keep cropping up.