33 Marketing management

S. Thilagamani

epgp books

 

 

 

 

 

Introduction:

 

The term marketing encompasses service activities and the intangible. According to the American Marketing Association, Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders. The vast majority of hospitality establishments however are operated to generate return on investment in the form of profits or excess revenue.

 

Objectives:

 

This module will enable the learners to

 

1.Understand the salient features and the need for marketing in food service organisations

2.Compile the various elements of marketing and its role in the management function.

 

The factor that defines marketing is a focus on the exchange that takes place between a producer and consumer. Before there was a monetary system, people would barter or exchange goods and services rather than money. Barter system is a process of exchanging goods and services rather than money.

 

Marketing management is the organizational discipline which focuses on the practical application of marketing orientation, techniques and methods inside enterprises and organizations and on the management of a firm’s marketing resources and activities.

 

Marketing as defined in the Indian Context

 

In the Indian context, requiring greater productivity consciousness in view of our limited resources, marketing management may better be defined as

 

The process of ascertaining consumer needs, converting them into products or services and then moving the products or service to the final consumer or user to satisfy such needs and wants of specific customer segment with emphasis on profitability ensuring the optimum use of the resources available to the organization.

 

Besides emphasizing consumer-orientation, this definition stresses two other important aspects namely

 

i. Profitability, and

ii. The optimum use of the available resources.

 

The ever increasing globalization of the hospitality and tourism industry, the hospitality firms have to makeup to remain competitive in the global market place.

 

MARKETING MIX AND ITS STRATEGY

 

The marketing manager’s job is thus to identify consumer needs, provide products or services aimed at satisfying such needs and then move the product or service with the help of appropriate strategies in the area of product planning, pricing, physical distribution and promotion so that the final result is two fold namely

 

i.Consumer satisfaction and

ii. Profitability of the operations.

 

THE MARKETING MANAGEMENT CYCLE

 

Marketing is an ongoing process and needs a constant attention to be successful and also the management’s role in the marketing effort is critic al. The marketing Management cycle consists of Marketing Planning, Marketing Execution and Marketing Evaluation.

 

1. Marketing Planning:

 

The goals and objectives of the marketing concepts must be precise , clear and measurable. These goals and objectives should be consistent with the food service industry’s mission statement.

 

2.  Marketing Execution:

 

Once the objectives and strategies are determined, the next step is to implement the action plans developed during the planning process. This is accomplished using the promotional, advertising, personal selling and direct marketing materials and methods that were developed in the planning stage.

 

3.  Marketing Evaluation:

 

The final step in the marketing management cycle is to monitor and control the elements of the marketing plan. The food service organisation’s performance needs to be analysed in comparision with goals and objectives looking for the difference between the performance goals and actual performance.The effectiveness of the marketing programs including the strategies for pricing, promoting, distributing its products and services and can be compared with sales, market share values and customer satisfaction. Finally at this point, the food service can return to the planning stage of the marketing manage ment cycle and make desired changes in the objectives and strategies.

 

The important strategies in marketing management are planning, organizing, motivating and controlling

 

PLANNING IN MARKETING

 

As the economical and social justification for the company’s existence in the satisfaction of customer’s wants, the elements of the marketing mix, the four p’s in marketing, should all be directed towards the customers. Planning should be aimed at the customer. It starts with the customer as well as finish with the customer in terms of ensuring satisfaction from the use of product or the service purchased.

 

PRODUCT PLANNING AND OBJECTIVE

 

Product planning can be defined as “the act of marketing out and supervising the search, screening, development, and commercialisation of new products; the modification of existing of lines; and the discontinuance of marginal or unprofitable items”

 

Thus product planning involves three important consideration namely

 

a)  The development introduction of new products

b) The modification and improvement of existing lines as required by the changing consumer needs and preferences and

c)  The discontinuance or elimination of marginal and unprofitable products.

 

In case of Product diversification, there are different reasons or objectives for which such diversification is under taken. For example, a company may diversify with a view

  • To take advantage of the existing reputation of the company
  • To use more effectively the company’s existing selling and distributive facilities
  • To increase the sale of existing products
  • To meet the needs of the distribution channels
  • To meet customer requests, particularly in case of industrial goods.

PRICING OBJECTIVE

 

The pricing strategy will naturally depend on what the management wants the pricing policy to do for the company, i.e the pricing objectives. Management may want the pricing policy

  • To skim the cream or make huge profits initially as in case of a novelty item with a short life
  • To obtain rapid market penetration for the product with a low price
  • To discourage potential competitors by pricing low and making it unattractive for them to enter the market
  • To achieve a target rate of return on investment or net leader or
  • To maximise the profits in terms of the demand.

 

PHYSICAL DISTRIBUTION OBJECTIVE

 

Again in the area of distribution or the selection of channels of distribution, it is necessary to ascertain the degree of market exposure required so that a selection could be made of the type of channel of distribution which would be appropriate. Basically there are three types of physical distribution objectives namely

 

  •  Intensive distribution
  • Selective distribution
  • Exclusive distribution

 

The intensive distribution objective seeks to secure maximum product exposure by selling the product through as many outlets as are willing to stock it. This policy is normally appropriate in the case of low priced mass consumer convenience goods. As against this, the selective distribution policy seeks to restrict the distribution outlets to those who can do an effective job worth the product. When this selection process is extended to the extreme, it results in exclusive distribution where, say, only one outlet is selected for a given geographical market. In this way, the degree of exposure intensity declines as one proceeds from the intensive to the selective and ultimately to the exclusive type of distribution strategy.

 

PROMOTIONAL OBJECTIVES

 

In the area of promotion, objective must also be crystallized. Particularly in the areas of advertising and sales promotion, objective are often not defined clearly and specifically. The objectives and purposes expected to be accomplished by advertising and sales promotion must be clearly determined. As an illustration, it is insufficient to state that the objective of our advertising is “to sell product X”. it is necessary to define the objectives more specifically as for example. To communicate specific qualities about product X

 

1)     Gain a specific degree of penetration

2)     In a definite audience of a given size

3)     During a stated time period.

 

ORGANISING IN MARKETING

 

Once planning is effected the next step in the management process is to organize the activities of the enterprise with a view to attain the objectives so crystallized. This organizing also has to be done with a customer –oriented focus. Thus organizing should start with the customer with a view to identifying the kind of customers at whom the marketing effort is to be directed.

 

ORGANIZING THE PRODUCT STRATEGY AND DEVELOPMENT

 

In the area of product strategy, decisions have to be taken regarding the product lines, the introduction of new products planning obsolescence, packaging and branding.

 

DIVERSIFICATION

 

An important facet of organizing the product strategy is product diversification which may be defined as “the manufacture or distribution by a single company of more than one commodity”

Product diversification can help increase the sales of the existing products or make a more effective use of the company’s selling and distribution facilities.

 

PACKAGING

 

Packaging design is another important aspect of product development. From the manufacture’s view point, thee two important attributes are generally “product” and “economy”. However, from the customer’s viewpoint, the question of the “convenience” is of greater significance. He would also like to be offered options in the form of size and would like packages that open easily. Packaging can also perform a useful “promotion” function and help educate the customers.

 

BRANDING

 

Finally, branding is also an integral part of the product strategy. A brand may be defined as “A name, term, sign, symbol, or design, or a combination of them which is intended to identify the goods or services of one seller or group of seller and to differentiate them from those of competitors”.

 

A brand includes a brand name, a trade mark, or both. Rightly or wrongly, customers often believe that products or well-known brands are of higher quality than products of unknown brands. Brands also serve to differentiate products.

 

PRICING STRATEGY

 

In pricing also, steps have to be taken to produce the best results in terms of the market segments towards whom the marketing efforts is directed. Stanton organizes the procedure for price determination into six steps as follows:

  • Estimate the demand for the product
  •  Anticipate the competitive reaction
  •  Establish the expected share of the market
  • Select the price strategy to be used to reach the market target
  •  Consider company policies regarding products, channels and promotion.
  •  Select the specific price.

ORGANIZING PROMOTION STRATEGY

 

In organizing the promotional activities, it is necessary to determine the advertising budget as well as select the optimum media mix. Budget allocation is often determined on the basis of available funds or on the footing of competitive allocation or more commonly as a percentage of sales. The best method would, however, be to allocate in terms of the objectives sought to be attained by the promotional effort. It is also necessary to determine the right media (press, outdoor publicity, advertising literature, films, etc.,) and the number of exposures required. Besides, a successful theme has to be organized to co-ordinate all the advertising appeals, in addition, it is necessary to coordinate the sales promotion activities.

 

Sales promotion in a specific sense may be defined as those marketing activities, other than personal selling, advertising, and publicity, that stimulate consumer purchasing and dealer effectiveness, such as display, show and exhibitions, demonstrations and various non current selling efforts not in the ordinary routine. Finally, personal selling has also to be organized. Personal selling is defined as oral presentation in a conversation with one more prospective purchaser for the purpose for the purpose of making sales.

 

MOTIVATING IN MARKETING

 

The next step in the management process in motivating, and in terms of marketing can be viewed from three aspects namely

A.    Motivating customers

B.     Motivating the sales or marketing personnel-particularly the sales force and

C.     Motivating distribution channels

 

Motivating customers

 

The best way to determine how to motivate the customers would be to begin with an analysis of the needs of the particular market segments aimed at to ascertain the relevant motives or drives which ought to be stimulated. This would enable the framing of suggestions on how such needs can be satisfied by purchasing the company’s products or services. A careful listing of appropriate motives can help the marketing man design his product, pricing and promotional strategies in terms of the relevant motives.

 

Motivating sales personnel

 

As in case of other personnel in the organization, the sales force requires adequate stimulation or motivation to put forward maximum effort to achieve the company’s objectives. The selling gob is a difficult one, the salesman has often to face frustration and observe irregular hours. He is precluded from leading a normal family life. the aspect of motivation thus gain special significance when considering the travelling sales force.

 

Motivating distribution channels

 

Finally distribution channels can also be looked upon as human beings who can motivated rather than adopting the usual mechanistic approach of viewing them as links in a “chain” of distribution.

 

CONTROLLING IN MARKETING

 

Finally the next step in the management process is controlling aimed at securing the achievements of the marketing plans . Every well-run company would want to evaluate or measure the effectiveness of its marketing operations as this would highlight the areas requiring improvement. In this connection, it may be mentioned that in the author’s survey of 200 executives in western India, 40 per cent of the respondents answered affirmatively to the question whether they evaluating each such function was either through sales performance or through periodical studies of market trends. In a few cases this was also done by using scientific techniques or through reports from salesmen and distribution.

 

The Hospitality Marketing Mix

 

Hospitality marketing mix consists of five components

 

1.      Product – service mix

2.      Presentation mix

3.      Communication mix

4.      Pricing Mix

5.      Distribution mix

 

1.  PRODUCT SERVICE MIX

 

This is a combination of all the products and services offered by the hospitality operation, including both tangible and intangible elements. The consumer has purchased and used the services and is largely intangible.

 

2.  PRESENTATION MIX

 

This included those elements that the marketing manager uses to increase the tangibility of the product – service mix as perceived by the consumer. This mix includes location, atmosphere and personnel.

 

3.  COMMUNICATION MIX

 

This involves all communication that takes place between the hospitality operation and the consumer. It includes advertising, marketing research and feed back about the consumer perceptions. The communication mix should be vie wed as a two way communication link, rather than a one way link. The food service operator seeks information and data from the consumer thereby establishing open communication with various market segments.

 

4.  PRICING MIX

 

The pricing mixing encompasses the consumer’s perception of value. The pricing mix includes such variables as volume discounts and bundling multiple products together for an overall discounted price. This bundling approach is used extensively by fast food chains as a method to increase spending by the customers.

  1. DISTRIBUTION MIX

This includes all distribution channels available between the firm and the target market. Historically the distribution occurred at the point of production such as the restaurants where the food was produced. This has changed since the newer distribution channels, such as the internet. The factors that have influence on the distribution mix are consumer perceptions, attitudes and behavior industry practices and trends, local competition, brand trends, government polic y and legislations.

 

Conclusion:

 

Finally it is management’s responsibility to understand the role of marketing within the food service organisation. It is important to understand the marketing interfaces with the other key result areas in the firm such as operations, finance, human resources, research and development as marketing focuses on the needs of the consumer and is an outside inside perspective as the production and service is well determined based on the customer needs, wants and desires

 

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Web references

 

 

Book References

 

  1. William J. Rothwell and H.C. Kazanas, 2006, Planning and Managing Human Resources, 2n d edition, Jaico Publis hing house, Delhi
  2. Aquinas P G, 2009, Human Resource Management Pricniples and Practice, Vikas Publis hing House Pvt ltd, Ne w Delhi
  3. Pravin Durai, 2010, Human Resource Management, Pearson Publications, New Delhi
  4. Jill Dyche, 2003, The CRM handbook, Pearson Publications, New Delhi