Marketing Management

1. Marketing Management A South African Perspective M C Cant & C H van Heerden (editors) H C Ngambi (consulting editor)

2. Chapter 1 • Learning objectives: • Explain what marketing is • Explain the concept of exchange • Describe the marketing activities • Discuss the four main marketing orientations • Define marketing • Explain the marketing process • Discuss the marketing function in an organisation The world of marketing

3. What is marketing? • Marketing has 2 facets: • 1st: it is a philosophy, an attitude, a perspective or a management-orientation that stresses customer satisfaction. • 2nd: it is a set of activities used to implement this philosophy. • Therefore marketing is the process of planning and executing the conception, pricing, marketing communication and distribution of ideas, products, and services to create exchanges that satisfy individual and organisational goals.

4. What is marketing? contd. • Marketing is about satisfying customer needs. • Marketing encompasses a set of processes for creating, communicating and delivering value to customers in a mutually beneficial relationship between the organisation and all its relevant stakeholders. • Exchanges takes place between the place of production and the place of consumption.

5. The concept of exchange • Exchange is all the activities associated with people giving up something to receive something they would rather have. • Exchange does not necessarily require money. • The 5 conditions required for exchange: • At least 2 parties must be involved. • Each party must have something that the other party values. • Each party must be able to communicate with the other party. • Each party must be free to accept or reject the other’s offer. • Each party must want to deal with the other party.

6. Marketing gaps • During exchange, certain gaps are created. • Identifying these gaps can be described as core marketing aspects. • The successful marketing of a suitable market offering is only possible if all the gaps in the process have been bridged: • Space gap: where a geographical distance exists between the manufacturer and the consumer. • Time gap: distribution of seasonal products. • Information gap: inform consumers with the correct information regarding a product. • Ownership gap: the buyer becomes the owner of the product. • Value gap: the seller and the buyer must agree on an acceptable exchange rate.

7. Intermediaries • The activities intended to bridge the gap between the buyer and the seller usually involve intermediaries. The 3 types are: • Middlemen: these are enterprises directly involved in taking title of products which are later sold to others. • Sales intermediaries: these are agents who do not take title of products they sell. They provide services to facilitate the sales process and are paid for these services. • Auxiliary enterprises: these are not directly involved in the transfer of title but provide support services to facilitate the selling process.

8. The marketing activities • Activities used to transfer the market offering to the buyer. • Primary marketing activity: transport • Auxiliary marketing activities: • Sourcing and supplying information – the seller must know who and where potential buyers are. • Standardisation and grading– products must be designed to conform to specific standards. • Storage – closes the time gap. • Financing – costs are incurred in the transfer or products and services from seller to buyer. • Risk-taking – the owner of the products is exposed to the risk of loss or damage. The risk is carried by both the seller and buyer.

9. Marketing orientations • 4 marketing orientations: • PRODUCT-ORIENTATION / PRODUCTION ORIENTATION Management assesses its resources and asks questions. Focussed on production of products only. • SALES-ORIENTATION Companies focus on sales alone. • MARKETING ORIENTATION It is based on an understanding that a sale depends not on an aggressive sales force, but on a customer’s decision to purchase a product. (Satisfying a need) • Consumer-orientation:all marketing actions should be aimed at satisfying consumer needs, demands and preferences. • Profit-orientation: all marketing actions should be aimed at maximising profit. • Organisational integration:“the sum of all the parts is larger than the whole” – the system is integrated as a whole. • SOCIETAL MARKETING-ORIENTATION Social responsibility of marketing. It is the obligation of the marketing organisation to do no harm to the social environment, and to use resources to enhance the environment.

10. Relationship marketing • Relationship marketing places its main focus on the maintenance of long term relationships between the organisation, the government, the public, the suppliers of raw materials, the organisation's employees, and current and potential customers. • It acknowledges that different marketing strategies must be used for consumer acquisition and retention. • Extended market: • Current customers • Potential customers • Suppliers • Potential employees • Reference groups • The influencers • Current employee

11. Defining marketingMarketing is a combination of management tasks and decisions aimed at meeting opportunities and threats in a dynamic environment in such a way that its market offerings lead to the satisfaction of consumers’ needs and wants so that the objectives of the enterprise, the consumer and society are achieved.

12. The marketing process

13. The marketing function in an organisation • This is a key function in an organisation owing to its contribution to profit and its proximity to the consumer. • Functional organisational structure:

14. The marketing function in an organisation • Operations functionfocuses on the processes needed to produce the need-satisfying products that are sold to customers. • All companies need people and the tasks performed by the human resource functionrelate to the acquisition, training, utilisation and retailing of a sufficient number of competent personnel. • The financial functionis aimed at the acquisition, utilisation and control of the funds necessary for running the business. • The purchasing functionensures that the materials necessary for production are bought at the right places, times, quantities and at the right price. • The public relations functionmaintains and cultivates a favourable and objective image of the organisation among those whose opinions are important to the achievement of the business objectives. • The administration functionmakes available internal information for planning and control. • The marketing functionis the only function that has the main aim of generating an income through its actions. • General managementincludes the activities of persons in managerial positions.

15. The management tasks in marketing • Marketing management:the process of setting marketing goals for an organisation (considering internal resources and market opportunities), the planning and execution of activities to meet these goals and measuring progress toward their achievement. • The management task consists of a continuous process of planning, implementing and controlling marketing activities. Marketing management: • Identifies opportunities and threats • Identifies those opportunities which can be utilised in terms of internal strengths and weaknesses • Compiles marketing data • Chooses a specific target market • Decides on the products to be produced in order to satisfy consumer needs • Decides on the selling price of products in order to attain the objective of profitability • Decides on specific distribution channels • Decides on marking communication methods • Decides on selection, training, remuneration and motivation of marketing personnel • Organises and leads the activities of the marketing department • Controls the marketing process

16. Planning, implementation, control/evaluation PLANNING • The management tasks of marketing management: • Functional marketing organisation: IMPLEMENTATION CONTROL/EVALUATION

17. Strategic marketing management • It entails the decisions of the marketing department with a view to long-term growth and survival in a competitive environment. • Strategic marketing takes place through the establishment of independent divisions called ‘strategic business units’. • A SBU directs its product offering at a specific market and manages the production, distribution and marketing communications function with a degree of independence.

18. Difference between strategic marketing and marketing management

19. Questions • The successful marketing of a suitable market offering is only possible if all the gaps in the process have been bridged. Name and discuss these gaps by using practical examples. (10) • The marketing activities consists out of primary and auxiliary marketing activities. Please name and discuss the auxiliary marketing activities by means of practical examples. (10)