Pricing Promotion Market Segmentation Place Product

1. CHAPTER THREE
MARKETING MANAGEMENT

2. IntroductionIntroduction
• Marketing is the business function that identifiesMarketing is the business function that identifies
unfulfilled needs and wants, defines and measures theirunfulfilled needs and wants, defines and measures their
magnitude, determine which target market themagnitude, determine which target market the
organization can best serve decides on appropriateorganization can best serve decides on appropriate
products, services and programs to serve these markets .products, services and programs to serve these markets .
• Marketing management is the process of planning andMarketing management is the process of planning and
executing the conception, pricing, promotion, andexecuting the conception, pricing, promotion, and
distribution of ideas, goods and services to create exchangedistribution of ideas, goods and services to create exchange
that satisfies individual and organizational goalsthat satisfies individual and organizational goals

3. Importance of MarketingImportance of Marketing
• Discovering what goods and services consumersDiscovering what goods and services consumers
need and wantneed and want
• Providing these items for the customersProviding these items for the customers

4. Core Concepts of MarketingCore Concepts of Marketing
• Need: is a state of felt deprivation of some basicNeed: is a state of felt deprivation of some basic
satisfaction..satisfaction..
• Wants: Wants are desires for specific satisfiers of needs.Wants: Wants are desires for specific satisfiers of needs.
• Demands: are wants for specific products that are backedDemands: are wants for specific products that are backed
ability to and willingness to buy them.ability to and willingness to buy them.
• Products: is anything that can be offered to satisfy a need orProducts: is anything that can be offered to satisfy a need or
want.want.
• Value: is the difference between the benefits that theValue: is the difference between the benefits that the
customer gains from owning and using a product and thecustomer gains from owning and using a product and the
costs of obtaining the product.costs of obtaining the product.
• Cost: the investment incurred in the acquisition of theCost: the investment incurred in the acquisition of the
product or the services.product or the services.

5. Core Concepts of MarketingCore Concepts of Marketing
• Satisfaction:Satisfaction:
• Exchange: is the act of obtaining a desired productExchange: is the act of obtaining a desired product
from someone by offering something in return.from someone by offering something in return.
• Transaction: consists of a trade of values between twoTransaction: consists of a trade of values between two
parties.parties.
• Relationship Marketing: A marketing effort sought toRelationship Marketing: A marketing effort sought to
build up long term relationship with customers,build up long term relationship with customers,
distributors, dealers and suppliers.distributors, dealers and suppliers.
• Markets: consists of all the potential and actualMarkets: consists of all the potential and actual
customers sharing a particular need or wantcustomers sharing a particular need or want

6. Classification of MarketsClassification of Markets
• Classification of Markets on the Basis of Free Intercourse:Classification of Markets on the Basis of Free Intercourse:
• Perfect MarketsPerfect Markets
• Imperfect MarketsImperfect Markets
• Markets on the Basis of Time Classification:Markets on the Basis of Time Classification:
– Very Short Period MarketVery Short Period Market
– Short Period MarketShort Period Market
– Long Period MarketsLong Period Markets
• Classification the Basis of the Position of Sellers:Classification the Basis of the Position of Sellers:
– Primary MarketsPrimary Markets
– Secondary MarketsSecondary Markets
– Terminal MarketsTerminal Markets
• Classification on the Basis of the Consumer Characteristics:Classification on the Basis of the Consumer Characteristics:
• Consumer MarketsConsumer Markets
• Industrial MarketsIndustrial Markets

7. Marketing PhilosophiesMarketing Philosophies
• The production concept holds that consumers will favorThe production concept holds that consumers will favor
those products that are widely available and low in cost.those products that are widely available and low in cost.
• The product concept holds that consumers will favorThe product concept holds that consumers will favor
those products that offer that most quality,those products that offer that most quality,
performance, or innovative features.performance, or innovative features.
• The selling concept holds that consumers will ordinarilyThe selling concept holds that consumers will ordinarily
not buy enough of the organization's products; thereforenot buy enough of the organization's products; therefore
organization must undertake an aggressive selling andorganization must undertake an aggressive selling and
promotion effort.promotion effort.

8. Marketing PhilosophiesMarketing Philosophies
• The marketing concept holds that the key to achievingThe marketing concept holds that the key to achieving
organizational goals consists of being more effectiveorganizational goals consists of being more effective
than competitors in integrating marketing activitiesthan competitors in integrating marketing activities
toward determining and satisfying the needs and wantstoward determining and satisfying the needs and wants
of target markets.of target markets.
• The societal marketing concept holds that theThe societal marketing concept holds that the
organization’s task is to determine the needs, wantsorganization’s task is to determine the needs, wants
and interests of target markets and to deliver theand interests of target markets and to deliver the
desired satisfaction more effectively efficiently thandesired satisfaction more effectively efficiently than
competitors in a way that preserves or enhances thecompetitors in a way that preserves or enhances the
customer’s and society’s well being.customer’s and society’s well being.

9. Market SegmentationMarket Segmentation
• Market Segmentation: Identifying and develop profile of distinctMarket Segmentation: Identifying and develop profile of distinct
groups of buyers who might require separate products and/orgroups of buyers who might require separate products and/or
marketing mixes.marketing mixes.
• Geographic segmentation is the dividing of an overall market intoGeographic segmentation is the dividing of an overall market into
homogeneous groups on the basis of population location.homogeneous groups on the basis of population location.
• Demographic segmentation is dividing and over all market intoDemographic segmentation is dividing and over all market into
homogeneous group based upon population characteristicshomogeneous group based upon population characteristics
• Psychographic segmentation utilizes behavioral profiles developedPsychographic segmentation utilizes behavioral profiles developed
from analyses of the activities, opinions, interest and life styles offrom analyses of the activities, opinions, interest and life styles of
consumers.consumers.
• Behavioral Segmentation: Potential segments may be divided intoBehavioral Segmentation: Potential segments may be divided into
two Users and non-users.two Users and non-users.

11. • Market Targeting: For market targeting sellersMarket Targeting: For market targeting sellers
first evaluate the profile of and profit potential offirst evaluate the profile of and profit potential of
each segment. The seller decides how manyeach segment. The seller decides how many
segments to cover based upon the size and growthsegments to cover based upon the size and growth
of the segment, its structural attractiveness andof the segment, its structural attractiveness and
company’s objectives and resources.company’s objectives and resources.
• Product Positioning: is an act of designingProduct Positioning: is an act of designing
company’s offer and image so that target marketcompany’s offer and image so that target market
understands and appreciates what companyunderstands and appreciates what company
stands for in relation to its competitors.stands for in relation to its competitors.

12. Marketing Mix ElementsMarketing Mix Elements
• Product means the goods and service combination theProduct means the goods and service combination the
company offers to the target market.company offers to the target market.
• Price is the amounts of money customers have to pay toPrice is the amounts of money customers have to pay to
obtain the product.obtain the product.
• Place includes company activities that make the productPlace includes company activities that make the product
available to target consumers.available to target consumers.
• Promotion means activities that communicate the meritsPromotion means activities that communicate the merits
of the product and persuade larger consumers to buy it.of the product and persuade larger consumers to buy it.

13. ProductProduct
• A product is anything that can be offered to a market forA product is anything that can be offered to a market for
attention, acquisition, use or consumption that mightattention, acquisition, use or consumption that might
satisfy a want or need.satisfy a want or need.
• Products can be classified in three groups according toProducts can be classified in three groups according to
their durability or tangibility.their durability or tangibility.
• Non durable goods: are tangible goods that normally areNon durable goods: are tangible goods that normally are
consumed in one or few users.consumed in one or few users.
• Durable goods: are those tangible goods that usuallyDurable goods: are those tangible goods that usually
survive many userssurvive many users
• Services: are activities, benefits or satisfactions that areServices: are activities, benefits or satisfactions that are
offered for saleoffered for sale

14. ProductProduct
• Based on the purpose that products are acquired:Based on the purpose that products are acquired:
• Consumer products are products bought by theConsumer products are products bought by the
final consumers for personal consumptionfinal consumers for personal consumption
• Industrial products are products bought byIndustrial products are products bought by
individuals and organizations for furtherindividuals and organizations for further
processing or for use in conducting businessprocessing or for use in conducting business

15. Consumer ProductsConsumer Products
• Convenience products: are products thatConvenience products: are products that
consumers usually buy with a minimum ofconsumers usually buy with a minimum of
comparison and buying effort.comparison and buying effort.
• Shopping products: are less frequently purchasedShopping products: are less frequently purchased
products.products.
• Specialty products: are products with uniqueSpecialty products: are products with unique
characteristic or brand identificationcharacteristic or brand identification
• Unsought products: are products that theUnsought products: are products that the
consumer either does not know or does know butconsumer either does not know or does know but
normally do not think of buyingnormally do not think of buying

16. Industrial ProductsIndustrial Products
• Materials and parts: refers to those products thatMaterials and parts: refers to those products that
make up the final product of the companymake up the final product of the company
• Capital items: are products that aids in theCapital items: are products that aids in the
buyers production or operation.buyers production or operation.
• Supplies and services: refer to those products thatSupplies and services: refer to those products that
are consumed in the production process orare consumed in the production process or
operation of buyers.operation of buyers.

17. New Product Development
• There are some sequential steps that companies need toThere are some sequential steps that companies need to
pass through in developing new product.pass through in developing new product.
• Idea GenerationIdea Generation
• Idea ScreeningIdea Screening
• Concept Development and TestingConcept Development and Testing
• Developing Marketing StrategyDeveloping Marketing Strategy
• Business AnalysisBusiness Analysis
• Product DevelopmentProduct Development
• Test MarketingTest Marketing
• CommercializationCommercialization

18. Product Life CycleProduct Life Cycle

19. Price
• It is the amount of money charged for a product orIt is the amount of money charged for a product or
service, or the sum of the values that consumersservice, or the sum of the values that consumers
exchange for the benefits of having or using the productexchange for the benefits of having or using the product
or service.or service.
• Factors Considered When Setting PricesFactors Considered When Setting Prices
• InternalInternal
• ExternalExternal

20. Factors Affecting PricingFactors Affecting Pricing
• Internal factors affecting pricingInternal factors affecting pricing
• Marketing objectivesMarketing objectives
• Marketing mix strategyMarketing mix strategy
• CostsCosts
• Organizational considerationOrganizational consideration
• External factors affecting pricingExternal factors affecting pricing
• The market and demandThe market and demand
• Competitor’s costs, prices and offersCompetitor’s costs, prices and offers
• Other external factorsOther external factors

21. Pricing ApproachesPricing Approaches
• Cost Plus PricingCost Plus Pricing
• Market Oriented PricingMarket Oriented Pricing
• Following CompetitorsFollowing Competitors
• Negotiated PricesNegotiated Prices
• Breakeven PriceBreakeven Price
• Creative PricingCreative Pricing

22. PromotionPromotion
• Promotion decision has two main objectives: to informPromotion decision has two main objectives: to inform
and influence another party.and influence another party.
• Advertising- any paid form or non-personal presentationAdvertising- any paid form or non-personal presentation
and promotion of ideas, goods or services.and promotion of ideas, goods or services.
• Sales promotions- a variety of short-term incentives toSales promotions- a variety of short-term incentives to
encourage trial or purchase of a product or a service.encourage trial or purchase of a product or a service.
• Personal Selling is a personal presentation by the firm’sPersonal Selling is a personal presentation by the firm’s
sales forces for the purpose of making sales and buildingsales forces for the purpose of making sales and building
customer relationships.customer relationships.
• Public relations is very believable news stories, features,Public relations is very believable news stories, features,
and events seem more real and believableand events seem more real and believable

23. Place
• distribution of products, covering both channel ofdistribution of products, covering both channel of
distribution and physical distributiondistribution and physical distribution
• The common channels of distribution are:The common channels of distribution are:
• Channels to Consumer ProductsChannels to Consumer Products
• Channels for Industrial ProductsChannels for Industrial Products

24. Channels to ConsumerChannels to Consumer
• Producer to ConsumerProducer to Consumer
• Producer to Retailer to ConsumerProducer to Retailer to Consumer
• Producer to Wholesaler to Retailer to ConsumerProducer to Wholesaler to Retailer to Consumer
• Producer to Agent to Wholesaler to Retailer toProducer to Agent to Wholesaler to Retailer to
ConsumerConsumer

25. Channels for Industrial ProductsChannels for Industrial Products
• Producer to Industrial UserProducer to Industrial User
• Producer to Agent Middlemen to Industrial UserProducer to Agent Middlemen to Industrial User

26. References
• Shanka, Mesay Sata. 2012. "Bank service quality, customer satisfaction and loyalty in
Ethiopian banking sector." Journal of Business Administration and Management
Sciences Research 1 (1):01-09.
• Sata, Mesay. 2013. "Factors affecting consumer buying behavior of mobile phone
devices." Mediterranean Journal of Social Sciences 4 (12):103.