Marketing Management

Abstract

Marketing management is the function and process of managing an organization's marketing budget, personnel, and activities. In general, the goal of marketing management is to effectively and efficiently use resources to increase customer base, improve customer perceptions of the organization's products and services, and help the organization meet its goals and objectives as related to the marketing function. Marketing management is a far-reaching function that encompasses the management of every aspect of the marketing within an organization. The role and scope of the marketing management function varies widely between organizations according to organizational characteristics (e.g., size, corporate culture) and industry.

Not long ago, marketing efforts seemed much less complicated affairs. Stories about rag-and-bone men traveling to a village with a dancing bear to grab attention and advertise themselves depict a simpler time. For better or for worse, 21st century marketing efforts are increasingly complicated. The use of a dancing bear in marketing efforts today might bring fleeting attention from potential customers, but would probably also result in earning the organization a negative reputation as well as the wrath of the ASPCA. Marketing managers today must be concerned with such concepts as branding, integrated marketing communications, marketing mix, and control systems for their sales forces.

Marketing management can be defined as the function and process of managing an organization's marketing budget, personnel, and activities. In general, the goal of marketing management is to effectively and efficiently use the organization's marketing resources to increase customer base, improve customer perceptions of the organization's products and services, and help the organization meet its goals and objectives as related to the marketing function. The role and scope of the marketing management function varies widely between organizations based on organizational characteristics (e.g., size, corporate culture) and industry. For example, a high-end consulting company is unlikely to hawk its services on late night TV in the same way as is done for onion choppers. Similarly, the role of the marketing manager in a small start-up company with only one product to sell is unlikely to be the same as that of the marketing manager in a large company or one with an established and varied product line.

General Marketing Functions

No matter the size or type of the organization or the stage of its products or services, there are certain general classes of activities that marketing functions and their managers need to take into account in order to better help the organization meet its goals and objectives: Analyzing the market and environment to determine how best to focus one's marketing efforts, determining what the optimal target market or market segment is for the particular market and environmental conditions, setting a marketing strategy and develop a marketing plan, determining the proper marketing mix for persuading potential buyers in the target market or segment to purchase the organization's products or services, and controlling the implementation of the strategy and plan. As shown in Figure 1, these efforts are cyclic in nature. To be optimally effective, a marketing manager needs to be constantly engaged in all phases of the process and with refining the marketing plan to better reflect the needs and realities of the real world.

Applications

Marketing Management

Although marketing has been viewed by some as a purely personality-driven set of activities whose objective is to persuade potential customers to purchase, it is much more than that. Marketing and the management of the marketing function, like other strategic functions within the organization, needs to be created based on a needs assessment and data analysis to determine what the needs of the market are and how best to position one's product or service to meet those needs. The collection and objective analysis of empirical data allow the marketing manager to make reasoned decisions as to the best way to market the products and services of the organization. Based on the collection and analysis of data regarding the needs, wants, buying habits, and other characteristics of the target market, the marketing management team can then develop a marketing strategy that will best enable the organization to meet its marketing objectives.

A number of factors impact the development of a unique strategy for an organization or product line and the development of a concomitant strategic marketing plan (see Figure 2).

• First, the assets and skills that the organization possesses or can readily acquire need to be determined. For example, if an organization selling application software wishes to market itself as a vendor offering superior customer support, it could not do so honestly unless it either had sufficient staff with sufficient time on the payroll to offer such support or could afford to hire the extra personnel needed for such support.
• The development of an effective marketing strategy must also take into account the market drivers for the industry. These are various political, economic, sociocultural, and technological forces that can influence the wants and needs of the consumer base. Increasing reliance on cordless and mobile telephones, for example, might make it a poor strategy for a communications equipment company to focus on the development of more attractive housings for corded phones.
• In addition, marketing management must consider the nature of the competition in the marketplace to help determine whether or not a marketing effort is likely to be successful. Part of the strategic marketing effort is to decide how best to differentiate oneself from the competition and demonstrate that one's product or service is superior to those offered by the competition.
• Not only must one consider the nature of the competition in the marketplace, one must also consider the stage of the market or the industry life cycle when developing a marketing strategy. Some organizations are innovators, and do best when introducing a new product to the marketplace to gain the initial share of the market. While other companies rush to take over some of the market share, innovating companies may be hard at work on another innovative product that can again reshape the demands of the marketplace.
• In addition, there are often strategic windows that affect an organization's ability to successfully compete in the marketplace. These are limited time periods during which there is an optimal fit between the needs of the marketplace and the competencies of the organization. For example, typically only one company can gain a strategic advantage for being the first to market an innovative new product. The competition must be content to improve on the initial design. However, it is often the initial company that retains the reputation for being an innovator and leader in the field. Once the strategic window begins to close (e.g., someone else comes out with the product), it is typically best that the organization looks for another opportunity.

The Marketing Mix

As opposed to the dancing bear approach to marketing referenced above, marketing in the 21st century is a complicated thing, requiring a combination of product, price, place, and promotion (called the marketing mix) to get a product into the hands of the consumer. One of the primary tasks of marketing is to optimize the mix to best position the product for success in the marketplace. The marketing mix may contain any number of approaches to marketing a product or service, each of which is designed to move prospective customers closer to a sale (see Figure 3). At the beginning of a marketing effort, these activities are targeted toward making the customer aware of the organization and its products or services. Once the prospective customer is made aware of the organization and what it has to offer, marketing efforts next focus on generating interest in the customer for purchasing the organization's goods or services. These activities also help prospective customers understand the nature and value of the organization's products or services and can help promote the conviction that the product or service being offered is something that is appropriate for the customer. Once this has been accomplished, marketing efforts attempt to turn this conviction that the product or service is appropriate or needed into a desire to purchase it. The marketing strategy should appropriately use the various elements of the marketing mix in order to improve the probability of a sale. Part of the role of the marketing management function is to develop a marketing plan that will incorporate and articulate these elements.

Customer Relationship Management

Marketing management is also concerned with building and maintaining a positive relationship with the organization's customers. Customer relationship management requires that an organization identify potential customers, acquire data regarding the potential and current customers, build relationships with customers, and influence customer perceptions of the organization and its products or services. As part of the process of customer relationship management, the marketing function identifies prospective customers, acquires data concerning prospective and current customers, builds relationships with customers, and attempts to influence their perceptions of the organization and its products or services. The activity of the marketing function is often based on an estimate of the customer's lifetime value to the organization. This theoretical information allows the marketing manager to know how much each customer is worth in terms of dollars of income which, in turn, allows the marketing manager to better allocate the marketing budget for a higher return on investment. Calculating customer lifetime value, however, tends to be complex (e.g., the customer's need or desire for the product may change, the competition may bring out a product that better fits the customer's needs), and reliable data to build a usable model and net cash flow from the customer are difficult to gather.

Internal Monitoring

In addition to managing the strategy of the marketing function and the relationship of the organization to the customer, part of the role of marketing management is to manage the marketing or sales personnel who put the plan into action. This includes the monitoring the activities of the sales staff to make sure that they are effective and successful. Part of the function of marketing management is to set performance objectives for the marketing personnel as well as ways to help enable the marketing force to meet those objectives. There are two general approaches to managing marketing or sales staffs. Outcome-based systems focus on the final outcomes of the marketing process (e.g., whether or not a sale was made, total revenues earned by a marketing person in a given period of time). This approach to the management of marketing personnel has the advantage of having standards that tend to be both objective and clear: Either the marketer made the assigned sales quote for a time period or did not. Criteria of success under such management systems tend to be clear and, therefore, require relatively little monitoring or direction by management. Outcome-based control systems are often favored for the management of marketing personnel because of the relative availability of criteria against which performance can be measured such as number of sales made or dollar volume earned within a given performance assessment period. Due to the offsite nature of many marketing jobs, such objective measures of performance are sometimes the only way to gather data about how well a marketing person is performing.

Behavior-Based Control Systems vs. Outcome-Based Control Systems

However, outcome-based control systems do not take into account a number of factors. Particularly on big ticket items, sales often occur over a period of time. In such situations, the marketer may need to establish a relationship with the customer, spend time gathering and analyzing data to assess the customer's needs, defend his/her product against the product of competitors, persuade the customer of the relative value of his/her product, and wait while the customer makes a decision according to the customer's time table. All these activities take time. As a result, there may be performance assessment periods during which a marketer may not have made any sales but is well on his/her way to making a significant sale. Because of such aspects of outcome-based control systems, some people argue that a behavior-based control system is more appropriate for use with marketing personnel. To overcome such potential situations, many marketing managers prefer to use a behavior-based control system. These systems focus more on the behavior of the marketing personnel more than on their final sales. As opposed to outcome-based control systems, however, behavior-based control systems require significantly more monitoring of both the activities and the results of the sales force's efforts as well as higher levels of direction and intervention in the activities of marketing personnel. Behavior-based control systems also tend to be less objective and more complex than outcome-based control systems.

Advantages of Behavior-Based Systems

However, behavior-based control systems overcome a number of the disadvantages associated with outcome-based control systems. First, behavior-based control systems allow marketing managers more control than do outcome-based systems. In behavior-based systems, the manager can better ensure that personnel are adhering to the sales plan and to the policies and procedures of the department. Further, since rewards in behavior-based systems are tied to behavior rather than outcomes, marketing personnel will be more motivated to follow the policies and procedures even if they are not necessarily convinced of their validity. However, fair, objective behavior-based systems are more difficult to develop than are outcome-based systems.

Conclusion

Marketing management is a far-reaching function that encompasses the management of every aspect of the marketing function within an organization. Although the details of how marketing management is conducted differently from organization to organization and from industry to industry, in general it comprises five elements:

• Analysis of the market and environment;
• Setting of the target market;
• Setting of a marketing strategy;
• Determination of an appropriate marketing mix;
• The exercise of control over all these activities and sub-functions.

In addition, it must be remembered that marketing management is an ongoing process. As human, financial, and other organizational resources change, both the strategic marketing plan as well as the way that marketing function is managed will have to change in response. Similarly, as the market or environment changes, marketing management will have to change in order to meet new customer needs or expectations, or changes to the market brought about the competition's activities or the economy in general. Marketing is much more than the application of sales technique to potential customers. It involves strategy, planning, control, and evaluation. It is the function of marketing management to accomplish these things.

Terms & Concepts

Brand: A trademark or distinctive name that is identified with a particular a product, service, or organization that makes it publicly and easily distinguishable from other products, services, or concepts. A brand may include a name, logo, slogan, or design scheme associated with the product, service, or organization.

Customer Relationship Management: The process of identifying prospective customers, acquiring data concerning these prospective and current customers, building relationships with customers, and influencing their perceptions of the organization and its products or services.

Decision Analysis: A collection of procedures, methods, and tools used to identify, represent, and assess the important aspects of a decision being considered in a decision making process.

Integrated Marketing Communications: An approach to marketing communications that combines and integrates multiple sources of marketing information (e.g., advertising, direct response, sales promotions, public relations) to maximize the effectiveness of a marketing campaign.

Management: The process of efficiently and effectively accomplishing work through the coordination and supervision of others.

Market Segmentation: A marketing strategy in which a general population or market is subdivided into categories based on an a priori definition of potential buyers and their likeliness to purchase one's goods or services. Marketing efforts are then concentrated on the segment most likely to purchase with the objective of gaining a major share of the segment as opposed to a smaller share of the general category of potential buyers.

Marketing: According to the American Marketing Association, marketing is "an organizational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders" (2007).

Marketing Management: The function and process of managing an organization's marketing budget, personnel, and activities. In general, the goal of marketing management is to effectively and efficiently use resources to increase customer base, improve customer perceptions of the organization's products and services, and help the organization meet its goals and objectives as related to the marketing function. The role and scope of the marketing management function varies widely between organizations based on organizational characteristics (e.g., size, corporate culture) and industry.

Marketing Mix: The combination of product, price, place, and promotion that is used to get a product into the hands of the consumer. One of the primary tasks of marketing is to optimize the mix to best position the product for success in the marketplace.

Marketing Plan: A plan that specifies the actions the organization will take to obtain customers for its proffered goods or services. The marketing plan includes the organization's marketing strategy (including such things as pricing, budget, specification of target markets) and intelligence about competitors.

Return on Investment (ROI): A measure of the organization's profitability or how effectively it uses its capital to produce profit. In general terms, return on investment is the income that is produced by a financial investment within a given time period (usually a year). There are a number of formulas that can be used in calculating ROI. One frequently used formula for determining ROI is (profits − costs) ÷ (costs) × 100. The higher the ROI, the more profitable the organization.

Strategic Marketing: The subfunction of marketing that examines the marketplace to determine the needs of potential customers, the strategy of the competitors in the market, and attempts to develop a strategy that will enable the organization to gain or maintain a competitive advantage in the marketplace.

Strategy: In business, a strategy is a plan of action to help the organization reach its goals and objectives. A good business strategy is based on the rigorous analysis of empirical data, including market needs and trends, competitor capabilities and offerings, and the organization's resources and abilities.

Target Market: The people or businesses to whom the entrepreneur wishes to sell goods or services.

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Suggested Reading

Ayağ, Z. & Özdemir, R. G. (2007). An analytic network process-based approach to concept evaluation in a new product development environment. Journal of Engineering Design, 18(3), 209–226. Retrieved February 16, 2009, from EBSCO Online Database Academic Search Complete. http://search.ebscohost.com/login.aspx?direct=true&db=a9h&AN=24409850&site=ehost-live

Brexendorf, T. O. & Kernstock, J. (2007). Corporate behaviour vs brand behaviour: Towards an integrated view? Journal of Brand Management, 15(1), 32–40. Retrieved February 16, 2009, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=26435844&site=ehost-live

Iacobucci, D. (2015). Marketing management. Stamford, CT: Cengage Learning.

Petty, R. D. (2008). Naming names: Trademark strategy and beyond: Part One -- Selecting a brand name. Journal of Brand Management, 15(3), 190–197. Retrieved February 16, 2009, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=27941125&site=ehost-live

Sellers-Rubio, R. & Mas-Ruiz, F. (2007). Different approaches to the evaluation of performance in retailing. International Review of Retail, Distribution and Consumer Research, 17(5), 503–522. Retrieved February 16, 2009, from EBSCO Online Database Business Source Complete. http://search.ebscohost.com/login.aspx?direct=true&db=bth&AN=27441981&site=ehost-live