Mkting Mgmt FULL

8/6/2019 Mkting Mgmt FULL

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WELCOMEWELCOME

TOTO

THE WORLD OFTHE WORLD OFMARKETINGMARKETING


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History of MarketingHistory of Marketing

ThoughtThought


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Early BeginningsEarly Beginnings

Marketing was considered in the

context of trading, brokers etc..

Plato

Thomas Aquinas

Adam Smith


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4 Eras in the Development of

Marketing Thought

Pre-Marketing Era Before 1900

Era-I Finding the Field 1900-1920

Era-II Formalizing the Field 1920-1950

Era-III Paradigm Shift 1950-1980

Era IV Fragmentation of the Mainstream 1980 to the present


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Pre-Marketing Era

The Industrial Revolution

Marketing as part of Economics

The Decade of inventions


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Era-I Finding the FieldEra-I Finding the Field

1900-19201900-1920

Development of Courses with Marketing

as title:

First course in Marketing: University of

Michigan 1902 Distributive andRegulative Industries

Ohio State University 1906

The Marketing of Products, University

of Pennsylvania 1906


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1900-19201900-1920

Three approaches to marketing discourse: The commodity approach

The Institutional approach

The Functional approach

Major concerns of the time were:Are there too many middlemen? Does

distribution cost too much?Does advertising raise or lower prices?What control if any should be exerted overnew combinations of distribution?


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1900-19201900-1920

Two major axioms of MarketingThought:

Marketing is an economic activity

[Axiom of economic exchange]

Marketing activities originate from themarketing manager


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Era-II Formalizing the FieldEra-II Formalizing the Field

--1920-1950 -1920-1950 -

Eventful 30 years for the world economy[Expansion-Contraction-War-Expansion]

Newer Products in the market:

Electric iron, Washing Machine, Color Television, Refrigerator

Supermarkets

Infrastructure for developing marketing thoughtBroad agreement on the principles of marketing


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-1920-1950--1920-1950-

Journal of Retailing (1925) from New York University

National Association of the Teachers of Marketing andAdvertising (1924)

American Marketing Society (1930)

The two merged in 1936 to become the AmericanMarketing Association

The Journal of Marketing was started by te AMA in1937


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-1920-1950--1920-1950-

New Text books started emerging in the area ofMarketing.

Paul Cherington 1920

Fred Clark 1922

Paul Ivy 1922

Paul Converse 1924

During this era, the mainstream text booksrepresented much of the body of academicthought


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-1920-1950-1920-1950-

As the era-II was ending there was a distinct

movement towards addressing the issue of the role of

theory and science in the field of Marketing

Paul Converse (1945) The Development of the

Science of Marketing

Wroe Alderson and Reavis Cox (1948) Towards

Theory of Marketing


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Era-IIIEra-III

Marketing Management and SciencesMarketing Management and Sciences

1950-19801950-1980

The Booming Post war economies

New Products, New Media, Competition

from abroad

The expanding field of Business Education

Increasing number of Business PhDs


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Era-IIIEra-III


1950-19801950-1980The evolving direction of Marketing thought had two

distinct characteristics:

Steeped in science as the basis for marketingthought development

Devoted to viewing the field from the perspective ofmarketing managers in order to help themundertake successful marketing programs


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Era-IIIEra-III


1950-19801950-1980Much of marketing theory as we know todaywas developed during this period:

The Marketing Concept

- John McKitternick 1957

Marketing Segmentation

- Wendell Smith 1956


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Era-IIIEra-III


1950-19801950-1980Marketing Mix

- Neil Borden (1964)

The 4 Ps- Jerome Mc Carthy (1960)

Brand Image

- Burleigh Gardner andSydney Levy (1955)


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Era-IIIEra-III


1950-19801950-1980Hierarchy of Effects

- Robert Lavidge andGary Steiner (1961)

Marketing Myopia

- Theodore Levitt (1960)

Wheel of Retailaing

- Stanley Hollander and

Malcom Mc Nair (1960)


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Era-IIIEra-III


1950-19801950-1980Several important text books heralded the push

towards a managerial orientation

Wroe Alderson (1957) John Howard (1957)

Jerome Mc Carthy (1960)

Philip Kotler (1967)


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Era-IIIEra-III


1950-19801950-1980The Ford Foundation Project in the 50s in the USA

to infuse mathematics to managerial sciences: Change the research agendas

Doctoral Educations

Teaching Approaches

A multi-pronged approach was applied which includedseminars, course sponsorships and training for faculty


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The Ford Foundation Project

A group of Promising Business Facultywere selected and were imparted

training in Mathematics for one year at

Harvard/MIT This group included: Frank Bass Robert Buzzell

Philip Kotler

William Lazer

Jerome Mccarthy

Donald Shawver


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The Advance of Consumer

Research

Grew out of the need for guidance from

the practitioners

Association for Consumer Research

(1970)

Journal of Consumer Research (1974)


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Era-IV Fragmentation of the MainstreamEra-IV Fragmentation of the Mainstream

(1980-to the Present)(1980-to the Present)

Destruction of the Command economies of theSocialist countries

Greater technological advancement Economic stagnation in the developed countries,rapid growth in the developing countries

Growth in computing power, internet

Newer products, media Cross-cultural shift


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Notable additions to marketing theory included:

Marketing Orientation

Jarowski and Kohli (1990)

Relationship Marketing

Berry (1985)

Service Quality

Parasuraman et al (1987)


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Emerging Five sub-classes of Marketing

thought

Core Marketing

Consumer Behavior

Managerial Marketing

Marketing Applications

Marketing Education


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MARKETING DEFINED

Marketing is the process of planning andexecuting the conception, pricing,promotion, and distribution of ideas, goods& services to create exchanges that satisfyindividual & organizational goals

Markets consist of individuals and firmsthat have the desire and ability to purchasegoods or services.


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PURPOSE OF MARKETING

Providing the right product

In the right place

At the right price

&

At the right time


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MARKETING MANAGEMENT

Marketing management is the art and science ofchoosing target markets and getting, keeping,and growing customers through creating,

delivering, and communicating superiorcustomer value

The aim of marketing is to make selling

superfluous

The Business of Business is to get customersand keep them Peter Ducker


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Marketing for the 21st Century(new economy)

Consumer capabilities:-

Substantial increase in buying power

Greater variety of goods and services

Great amount of information oneverything

Better & easy interacting & placing

ordersAbility to compare notes on products

and services.


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Marketing in New Economy

Organizational capabilities:-

Powerful new information & sales channelwith augmented geographical reach.

Better internal & external communication dueto improved information technology.

Customize offerings to customers

Substantial cost savings due to improved

logistics and operations.


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Demand States & Marketing

Tasks

Negative demand: (market dislikes the product orservice and may even pay a price to avoid it. Employers have anegative demand for ex-convicts & alcoholics)- Task is to analyzewhy the market dislikes and find solutions.

No demand (consumers may be unaware oruninterested in the product)- Task is connect the benefits of theproducts with the consumer needs and interest.

Latent demand(consumers strong need whichcannot be satisfied by an existing product e.g. harmless cigars)-Task is to measure the potential market size and develop goods orservices to satisfy the demand.


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Demand States & Marketing

Tasks continued

Declining demand (demand falls due to variousreasons)- Task is to analyze causes and find solutions.

Irregular demand(demand varies on a seasonal, dailyor even hourly basis. Holiday spots are visited more on holidays e.g.

Vegaland, Kodaikanal, other Hill stations)- Task is to find ways toalter the demand patterns. (synchromarketing)

Full demand(full production & sale)- Task is to maintain.

Overfull demand(demand is higher than they canhandle, e.g. overcrowding in parks in summer)-Task is demarketing.

Unwholesome demand(cigarettes, alcohol, harddrugs, handguns)- Task is to get people to give it up.


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MARKETING CONCEPTS Exchange concept(exchange of a product between the

seller & buyer is the central idea of Marketing) Production concept(all efforts focused on production

to achieve cost reduction through mass production and assumes thatlow cost will automatically bring in customers)

Product concept(concentrates on product excellenceand new product development and fails to find what the customerneeds)

Sales Concept (pushing products through aggressivepromotional activities, high power personal selling etc)

Marketing Concept(entire business has to be seenfrom the point of view of the customer. Think customer & actcustomer

Societal Concept (responsible to the society as they areutilizing the resources from the society for making profit)


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Significant features of Marketing Concept

Customer Orientation (Customer is the focal point ofthe business)

Integrated Management, with Marketing asthe fulcrum (every function has a bearing on thecustomer)

Consumer Satisfaction (fulfilling the needs of thecustomer)

Realization of organizational goals includingprofit.


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MARKETING CONCEPTS continued

Meeting needs profitably

Find wants and fill them

Love the customer, not the product

Have it your way (Burger King)

You are the boss (United airlines)

Put people first (British Airways) Partners for profit


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Marketing Concept(summary)

Market focus (tailor marketing programs foreach target market)

Customer orientation (Customer attraction &retention)

Coordinated marketing (all functional areas

to be aligned) Profitability (emerges as a by product of

integrated marketing)


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Marketing Mix Four Ps Four Cs

Product Customer solution

Price Customer cost

Place Convenience

Promotion Communication People , Processes & Physical evidence


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VALUE & SATISFACTION

Value is a combination of quality, service and price (QSP). Value increases with quality and service and decreases with price.

Marketer can increase the value of his offering in several ways:

Raise benefits Reduce Costs Raise benefits and Reduce costs Raise benefits by more than the raise in

costs Lower the benefits by less than the reduction

in costs


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Six Basic Questions About

Customers: - What do they buy? (Durable goods, Non-durable,

Convenience goods, Specialty goods, shopping goods, etc.)

Why do they buy? (Variety of needs-physiological,safety, status)

Who does the buying? & Who influences buying?(Initiator, influencer, decider, purchaser, user)

How do they buy? (Cash or credit)

How much do they buy? (Quantity)

Where do they buy? (Super markets, Grocery shops)


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Major factors which influences

Customers decision to buy: -

What he can afford?

How his environment influences him?

What are his personal attitudes and

opinions?


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DIFFERENCE BETWEEN

SELLING & MARKETING

SELLING MARKETING

Sellers needs Customer needs

Existing products Consumer focus

Profits by pushing Customer delight Quick encashment Needs to products

Producing process Satisfying process

Cost determines price Consumer determines

the cost. Views customer as a Very purpose of business.last link.


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MARKETING ENVIRONMENT &

ENVIRONMENT SCANNING

Analyzing the environment(Govt impactand policies, technologies available)

Analyzing the Market and Competition-(SWOT analysis of Competition)

Customer sensing - (who remains closest tocustomer and why?)

Analyzing all aspects of the product-(Firm attempts to predict the PLC of the proposedproducts)


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MARKETING ENVIRONMENT

Factors of Environment Analysis

Macro environment:-

Demographic environment

Socio-cultural environment

Economic environment

Political environment

Natural environment

Technology environment & Govt policy


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MACRO ENVIRONMENTAL FACTORS

SOCIAL TECHNOLOGICAL

ECONOMIC POLITICAL

s

E

T

P


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Indian Marketing Environment

Opening up of the economy - Since 1991India is going through a process of economic

reforms and liberalization.

Policies relating to industrial licensing, tradeand foreign investment have undergone

major changes.

Economic institutions, banking sector andcapital markets have been the major targets

of the change.


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The reforms aim at modernization, and

integration of Indias economy with the

global economy.

Economic reforms were:-

Liberalization measures

Macroeconomic reforms and Structuraladjustments.


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LIBERALISATION MEASURES

1. The New Industrial Policy:-

Liberalization of Industrial licensing FERA liberalization

MRTP liberalization

Curtailment of Public Sector


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MACROECONOMIC REFORMS

Fiscal & Monetary reforms

Banking Sector reforms

Capital Market reforms


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STRUCTURAL ADJUSTMENTS

Phasing out subsidies

Dismantling of price controls and

introduction of market-driven price

Public sector restructuring and

disinvestment

Exit Policy(VRS & National Renewal Fund (NRF)


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Elements of Marketing Strategy

1. Marketing Strategy

2. Target Market

3. Marketing Mix

4. Competitive Advantage

5. Marketing Plan


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MARKETING STRATEGY

1. A game plan to reach customers

2. Captures what a firm wants to do and

how it will accomplish it

3. Specifies a target market and arelated marketing mix

Target Market


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Target Market

Represents a fairly homogenous (similar)group of customers to whom a firm wishesto appeal based on shared characteristics,lifestyle, behavior, etc.

Marketing Mix

Controllable tactical tools that the firm usesto satisfy a target market traditionally calledthe 4 Ps@ - product, price, place, and

promotion. 4 P's are interdependent andchangeable.


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MARKETING PLAN A written statement of a marketing strategy and the

time related details for carrying out the strategy arekey considerations:

1. What marketing mix is to be offered?

2. To what target market?

3. For how long?

4. What resources, results, control?


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Contents of Marketing Plan

Executive summary Table of Contents

Situation Analysis

Marketing Strategy

Financial Projection (Projected P&L)

Implementation Controls


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Two levels of Marketing Plan

Strategic Marketing Plan

It lays out the targetmarkets and the valueproposition that willbe offered, based onthe analysis of the

best marketopportunities.

Tactical marketingPlan

Specifies themarketing tactics,

including productfeatures, promotion,merchandising,pricing, sales

channels andservice.


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TASKS IN MARKET PLANNING

Analyzing the marketing environment andspotting the opportunities and threats

Internal appraisal (S-W of Marketing, Finance,Manufacturing, R&D, Human resources, General factors)

Setting Marketing Objectives of the unit

Formulating Marketing strategy of the unit

Developing detailed marketing plans,programmes, and marketing budget


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Planning Activities

Defining the Corporate mission

Establishing strategic business units

Assigning resources to each SBU

Assessing growth opportunities


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What brings us to this particular

business? What would be the nature of this

business in future?

In what business would we like to be in,in the future?

What are our strengths and distinctive

capabilities to pursue the presentbusiness or to branch off into the

desired business?

THE CONCEPT OF STRATEGICTHE CONCEPT OF STRATEGIC


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THE CONCEPT OF STRATEGICTHE CONCEPT OF STRATEGIC

BUSINESS UNITS (SBUBUSINESS UNITS (SBU)) Systematic grouping of business by multiSystematic grouping of business by multi

business corporations.business corporations.

Such Organizations can group itsSuch Organizations can group its

products/businesses into manageable numbersproducts/businesses into manageable numbersand take them up for strategic planning.and take them up for strategic planning.

Mission, objectives , competition, and strategyMission, objectives , competition, and strategy

will differ with SBUswill differ with SBUs

Each SBU will have its own distinct strategy,Each SBU will have its own distinct strategy,and CEO.and CEO.


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BPL (6 SBUsBPL (6 SBUs))

Entertainment electronicsEntertainment electronics

ComponentsComponents

TelecomTelecom PowerPower

Soft energySoft energy

Financial servicesFinancial services


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Two well-known models in appraising

business portfolios:

The Boston Consulting Groups Growthshare Matrix (BCG Model)

General Electric Multifactor Portfolio

Planning Matrix (GE Model)


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The BCG ModelThe BCG Model

The BCG Growth-Share matrix dealsThe BCG Growth-Share matrix dealswith the process of evaluation ofwith the process of evaluation ofindustry growth and the relativeindustry growth and the relativeposition of a firm in the industryposition of a firm in the industry

This matrix classifies the businessThis matrix classifies the businessof a firm into four categories on theof a firm into four categories on thebasis of the two parameters,basis of the two parameters,

industry growth and market shareindustry growth and market sharerelative to other main playersrelative to other main players

Business PortfoliosBusiness Portfolios


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Stars

Cash Cows

Question Marks

Dogs

????

?? ??

??

MarketG

rowthRate

Relative Market Share

High Low

High

Low



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Question Marks

High growth, low share Build into Stars/ phase out Requires cash to hold

market share

Question Marks

High growth, low share Build into Stars/ phase out Requires cash to hold

market share

Stars

High growth & share Profit potential May need heavy

investment to grow

Cash Cows

Low growth, high share Established, successful SBUsProduces cash

Cash Cows

Low growth, high share Established, successful SBUsProduces cash

Dogs

Low growth & share Low profit potential

Dogs

Low growth & share Low profit potential

Relative Market ShareHigh Low

Marke

tGr o

wth

R

ate

Low

H

igh



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McKinseys 7sMcKinseys 7s

StaffStaff

StructureStructure

StyleStyle

SkillsSkills

SystemsSystemsStrategyStrategy

SharedValues

SharedValues

CLASSIFICATION OF BUSINESS


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CLASSIFICATION OF BUSINESS

AS PER BCG MATRIX

STARS- belong to high-growth industriesand a market leader. (great potential for future)

QUESTION MARKS- belong to high-

growth industries and a follower.(uncertain future)

CASH COWS- operate in low-growthindustries as a market leader. (higher profits)

DOGS- operate in low-growth industries asa poor follower. (drag on the company & cash traps)



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Planning Matrix (GE Model)

Rating business on the basis of:-

Industry attractiveness (How

attractive is the industry?)

&

Companys Business Strength (Howattractive is the firm in the industry?)


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Assembling Marketing Mix

What is the best combination of the four Psin a given situation?

Which are all the products that can beoffered to an identified target market?

What should be Price structure?Which channel has to be selected?

What is the right Promotion Strategy?

How should the total marketing effort andresources of the firm be apportioned amongthe four Ps?

How the balancing act has to be done?

MARKETING RESEARCH


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MARKETING RESEARCHModule-2

Collection and analysis of data from a sampleof individuals or organizations related to theircharacteristic, behavior, attitudes, opinions orpossessions. It includes all forms of research

such as consumer and industrial survey,psychological investigations, observations andpanel studies.

MARKETING RESEARCH


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MARKETING RESEARCHMarketing Research is the systematic

design collection, analysis andreporting of data and findings relevant

to a marketing situation facing the

company.Marketing research is a research on the

manifold problems of marketing.

It helps to know which products movein the market and Why?

CONDUCTING MARKETING RESEARCH


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CONDUCTING MARKETING RESEARCH

Marketing research can be conductedby appointing research agencies,

college students, management

students, and consultants and throughemployees. Large companies give this

as a project to MBA students.


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Market Research Firms

Syndicated service research firms: Theygather periodic consumer and tradeinformation and sell this for a price.

Custom marketing research firms: Take upspecific research projects for specified fees.

Specialty line marketing research firms:These firms provide specialized service toother marketing research firms and marketresearch departments of companies.


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The Most common Marketing researchactivities are: -

Market potential and market share analysis

Sales and Business trend analysis

Forecasting studies

Product and pricing studies

Testing Products.

Marketing Research jobs can also be


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Marketing Research jobs can also beclassified based on the subject ofResearch

Research on Customer

Research on Market Demand

Research on Branding

Research on Competition

Research on Distribution

Research on Pricing

Research on Advertising & Salespromotion

Research on Sales Methods.

STEPS INVOLVED IN MARKETING


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STEPS INVOLVED IN MARKETING

RESEARCH PROCESS

Defining the Marketing Problem andResearch objectives

Specifying the information requirement

Developing the research planCollecting Primary & Secondary information

Analyzing and interpreting the information

Summarizing the findingsPreparing the Research Report.

Fi t St i M k t R h


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First Step in Market Research

Estimating The Size of The Market

Quantitative Assessment of the market size

to know whether it permit profitable

operations for the proposed business.

After this is done one can make a qualitative

assessment of the market e.g. Product

image, Price, Packaging and Promotionappeals.

T i l f M k ti


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Terminology of MarketingResearch

Primary data- collected firsthand

Secondary data- already exists

Quantitative research- statistical basis

Qualitative research- subjective &personal

Sampling- studying part of a population

PRIMARY DATA COLLECTION


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PRIMARY DATA COLLECTION

Observation Method

Experiment Method

Survey method

Marketing Intelligence system


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Managers can obtain information


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Managers can obtain information

in four ways:-

Undirected viewing General exposure toinformation without any specific purpose.

Conditioned viewing Directed exposure to

an identified area or type of information.

Informal search Unstructured effortspecific information for a specific purpose

Formal search A deliberate effort with apre-determined plan to obtain a specificinformation or relating to a specific issue.

M k ti R h T h i


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Marketing Research Techniques

Interviews- (Face to face, telephone, postal questionnaire)

Attitude Measurement- Cognitive component (know or believe about an act or object)

Affective component (feel about an act or object)

Conative component ( behave towards an object or act)

Likert Scale


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Likert Scale

strongly agree

agree

neither agree nor disagree

disagree

strongly disagree

Semantic differential scales- (differencesbetween words e.g. practical v impractical)

Projective techniques- (sentence completion,psychodrama (yourself as a product), friendly martian (what

some one else might do)

Group discussion and focus group


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Group discussion and focus group

Postal research questionnaires

Diary panels- sources of continuous data

Telephone research

Observation

In store testing

Buyer behavior


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Buyer behavior

What motivates the buyer? What induces him to buy? Why does he buy a specific brand?

Why does he buy from a particular shop? Why does he shift from one shop to another or from

one brand to another? How does he react to new product & Information? What are the stages he travels through before he

makes the decision to buy?

CONSUMER MARKETS &


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CONSUMER BEHAVIOUR

Individual Buyer Business Buyer

Buying for own, Buying for

Personal, or family manufacturing,

Consumption. Reselling or for

use in enterprise

The buying behavior i.e. motivation, attitude, andpurchase of the two categories are entirely different

Identifying Potential Markets

Identifying Potential Markets


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Identifying Potential MarketsIdentifying Potential Markets

GrowthGrowth

ConcentrationConcentration

LiteracyLiteracy

Rate of Growth

Population Density

Communication Concerns

Focus:

Focus:

Focus:

Focus :

MoneyMoney Relative Buying Power

Focus :

A Model of Buyer Behavior

A Model of Buyer Behavior


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A Model of Buyer BehaviorA Model of Buyer Behavior

MotivationPerceptionLearning

AttitudePersonality/Lifestyle

Purchase ReasonTimeSurroundings

PurchaseSituation

PsychologicalVariables

FamilySocial ClassReference Groups

Culture

SocialInfluence

Problem-Solving Process

Person Does or Does Not Purchase (Response)

Marketing Mixes All Other Stimuli

PersonMakingDecision


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Factors influencing Buyer behavior


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Factors influencing Buyer behavior Individual factors:

Cultural factors: Culture, religion,language

Personal factors: Age, education,occupation, status, life style, self concept, public

image.

Psychological factors: Motivation,perception, learning, beliefs and attitudes



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Socio cultural or Group influence

Influence of groups: family, friends, peer

Influence of broad social class other than

the above

Information from various sources

Buying Decision Process


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Buying Decision ProcessMarketers must identify the person who

makes the actual buying, the types of buyingdecisions and the steps in the buyingprocess.

Five roles people play in the buying decision

Initiator Influencer

Decider Buyer User

Social Influences on Buyer Behavior


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Social Influences on Buyer Behavior

Culture:the set of beliefs, attitudes, and

ways of doing things among a group ofpeople

Social Class:a group of people who have

approximately equal social position Family Decision Making:how families

make joint decisions about purchases

Reference Group:people to whom an individuallooks when forming attitudes (family, peers, friends, movie stars)

Opinion Leader:a person whose opinion in his fieldof expertise is respected by us. Sachin Tendulkar tells the kids

Boost is the secret of my energy. Cola ads by Amitha bachan

Buying Motives (Reasons)


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Buying Motives (Reasons)

Inherent & Learned buying motives

Basic needs Leans from education &

environment Emotional & rational motives(impulse & Logical)

Psychological & Social motives

Consumer patronage motives (buying from the sameshop)


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Consumer Problem Solving

Consumer Problem Solving


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AwarenessAwareness

Gathering InformationGathering Information

Evaluating AlternativesEvaluating Alternatives

Choosing a SolutionChoosing a Solution

Evaluating the DecisionEvaluating the Decision

Need to Satisfy

How Products Fill Needs

Ranking Products

Selecting a Product Solution

How Did It Work Out?

Focus:

Focus:

Focus:

Focus :

Focus :


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The Adoption Process

The Adoption Process


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The Adoption Processp

1. Awareness1. Awareness

2. Interest2. Interest

3. Evaluation3. Evaluation

4. Trial4. Trial

5. Adoption5. Adoption

6. Confirmation6. Confirmation

SixStepsin theConsumerAdoptionProcess

SixStepsin theConsumer

AdoptionProcess

Types of Organizational Buyers

Types of Organizational Buyers


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ManufacturersManufacturers

Service ProducersService Producers

Retailers &

Wholesalers

Retailers &

Wholesalers

GovernmentsGovernments

Grouped by Industry

Close to Customers

Buying for Targets

Bids & Regulations

focus.:

focus.:

focus.:

focus. :

Buying Centers

Buying Centers


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Buying Centersy g

BuyingCenter

BuyingCenter Influencers

InfluencersUsersUsers

GatekeepersGatekeepers DecidersDeciders

BuyersBuyers

Basic Methods in Organizational

Basic Methods in Organizational

B i


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BuyingBuying

Basic

Methods

Basic

Methods

Inspection Sampling

Description NegotiatedContracts


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Characteristics of Business Buyers


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Characteristics of Business Buyers Buying clout-existence of only small no of users

Concentration of buyers-industrial buyers aregeographically concentrated and has a special bargaining

power.

Direct one to one relationship with the seller Technical support for buying when it involves

complex products

New product introduction takes longer time

Closer monitoring of supply sources

Buyers are more rational


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Factors that influence industrial buying

Environmental factors: (economic, Govt policies,interest rates)

Organizational factors: (objectives, policies,procedures, organizationalstructure, systems)

Interpersonal factors: (authority, status)

Individual factors:(age, income, education, job

position, risk taking)


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C O M P E T I T I O N

Threats of new entrants

Bargaining power of Buyers

Bargaining power of Suppliers

Rivalry for market share

Entry of substitutes in the market place


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Why should we analyze Competition?

It is an integral part of Marketing analysis

Supports appropriate strategy formulation

Facilitates to know the industry attractiveness and

its competitive position within the industry

Helps to identify and build competitive advantage

and core competence


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BARRIERS IN INDUSTRY Entry barriers

Mobility barriers

Shrinkage Barriers

Exit barriers


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HOW DO FIRMS BUILD COMPETITIVEADVANTAGE?

Benchmarking Value chain analysis (analyzing ones own & competitors)

Innovation in any function Integration (Vediocon bought Uptron picture tubes factory) Outsourcing Mergers and acquisitions Strategic alliances (IBM-Apple, IBM-Siemens, Tata-AT &T)

Creation of entry barriers (Maruti small budget car) Production differentiation Brand dominance (Nestles Maggi Noodles (Brand power) Using core competence for competitive advantage


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CORE COMPETENCE

Unique strength & stronger competitive

advantages which cannot be easily imitated

by competitors.

It can be uniqueness in technology or

process or any other specialty or expertise.

C


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Distinction between CompetitiveAdvantage & Core Competence

Competitive advantage need not imply a corecompetence while core competence is a competitiveadvantage.

Competitive advantage is short term while corecompetence is long term.

Competitive advantage accrues from functionalstrength while Core competence has to be at the root

of the business (technology/process) Competitive advantage can be imitated over a period

of time while Core competence is long lasting. Competitive advantage is not unique while Core

competence is fundamental & unique.

DEMAND FORECASTING


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MARKET POTENTIAL: - (Industry Potential)

This is an estimate of the total sales by all the firms

selling the same product in a given market or for agiven environment.

COMPANY POTENTIAL (Sales Potential)

This refers the sales that can be achieved or

expected by the company in a given market. MARKET DEMAND (Industry demand)

This refers to the total volume that would be boughtby a defined customer group in a definedgeographical area in a defined time period in adefined marketing environment under a definedmarketing program.

MARKET FORECAST:-(Industry forecast)


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MARKET FORECAST: (Industry forecast)

Total sales forecast of the industry

COMPANY FORECAST:- (Sales forecast)

Sales forecast of the Company. The portion ofthe Company demand which the company

expects to capture in the market place.

DEMAND FORECASTING METHODS


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BUILDING-UP TECHNIQUES

Past Sales and Trend Analysis Executive Judgment

Sales force Composite

Analysis of Market factors

STATISTICAL METHODS

Direct derivation method Correlation Analysis technique

Prof. Philip Kotler has explained thefollowing methods: -


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following methods: -

METHODS BASED ON What people say? Survey of buyers intentions Composites of Sales force opinions

Expert Opinions

METHODS BASED ON What people do? Market Test Method

METHODS BASED ON What people have

done? Classical Time-series Analysis Statistical Demand Analysis

To sum up Salesf ti th d


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forecasting methods Jury Method or Executive Opinion Method Survey of experts opinion (experts from the field inside or

outside the firm)

Delphi Method (also a kind of survey of expert by a panel

through questionnaires

Sales force composite method (based on sales force judgment)

Quantitative Methods:-

Simple Projection method, Extrapolation Method, Moving

averages method, Exponential smoothing, Time series

analysis.

MASS MARKETING: -


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The seller engages in mass production, mass distribution,and mass promotion of one product for all buyers. Mass

marketing leads to cost reduction and this will be reflectedin low prices and in turn helps to tap the largest potentialmarket.

PRODUCT-VARIETY MARKETING: - The seller produces several products that exhibit different

features, styles, sizes and so on

These are designed to offer variety of buyers rather than toappeal to different market segments. Consumers seekchange and variety.

TARGET MARKETING The seller segregates the major market segments, targets

one or more of these segments, and develops products andmarketing programs tailored to each selected segment.

Todays companies are finding mass marketing and product-variety marketing quite unrewarding.

MARKET SEGMENTATION


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Philip Kotler Wherever a market for a product or service consists of two

or more buyers, the market is capable of being segmented,that is divided into meaningful buyer groups. The purposeof segmentation is to determine differences among buyerswhich may be consequential in choosing among them ormarketing to them

Market segmentation consists of taking the totalheterogeneous market for a product and dividing it intoseveral sub-markets or segments, each of which tends to behomogeneous in full significant aspects

Market segments are grouping of consumers according to

such characteristics as income, age, degree of urbanization,race, or other classification, geographic location oreducation


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PATTERNS OF MARKETSEGMENTATION


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SEGMENTATION

Homogeneous preferences

Diffused preferences

Clustered preferences

ADVANTAGES OF MARKETSEGMENTATION


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SEGMENTATION

Facilitates customer group formation andidentification

Helps proper choice of target market Helps Divide the markets and Conquer them

Helps to crystallize the needs of the targetbuyers

Helps to achieve specialization in product,distribution, promotion and pricing depending

on market segment. Helps to concentrate on most productive and

profitable segments

BASES FOR SEGMENTING MARKETS Geographic Segmentation: -


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Geographic Segmentation:

(Region, State, District, Zone, Urban/Rural)

Demographic Segmentation:

(Based on age, sex, marital status, family size, race, religion,community, purchasing power, educational level, socialstatus)

Psychographic Segmentation: -(Personality traits, attitudes, lifestyle, value system)

Buyer behaviour segmentation (buying motives)

Benefit Segmentation

Volume Segmentation (Potential quantity of purchase)

(Bulk buyers, small-scale buyers, and regular buyers)


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EVALUATING MARKET SEGMENTS


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Is it sizeable?

Is it growing?

Is it profitable?

Is it accessible?

Is it compatible with the firms resources and

capabilities?

SELECTING THE TARGETMARKET


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MARKET

Single segment concentration: (small car

market)

Selective specialization: (diversifying the risk)

Product specialization: (Specialization in one product) Market specialization:(serving only one customer group)

e.g. lab equipments to Colleges.

Full market coverage: (serve all customer groups with

all products)

Differentiated Marketing: - Here the firm operates in most market


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Here the firm operates in most marketsegments but designs different programs for

each segment. (IBM offers many hardware and softwarepackages for different segments in the computer market).

Undifferentiated Marketing: - The firm ignores the market segment

differences and goes after the whole marketwith one market offer.

This focuses on what is common in theneeds of buyers and designs marketingprograms to suit the target market.

Name Broad Product

Segmenting Product-Markets

Segmenting Product-Markets


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Name Broad Product-Market

Name Broad Product-Market

List Customer NeedsList Customer Needs

Narrow Product-MarketsNarrow Product-Markets

IdentifyDetermining Dimensions

IdentifyDetermining Dimensions

Name PossibleMarket segments

Name PossibleMarket segments

Evaluate SegmentsEvaluate Segments

Estimate SizeEstimate Size

ProcessforSegmenting

Product-Markets

ProcessforSegmenting

Product-Markets

Think about four basic types ofopportunities


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Market

Penetration

Market

Development

Product

Development

Diversification

Present Products New Products

PresentCustomers

New

Customers

opportunities

Developing Market-Oriented



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Strategies in Broad Product-Markets

Strategies in Broad Product-Markets Combined Target

Market ApproachMultiple Target

Market ApproachSingle Target

Market Approach

This approach segments the marketand picks one of the homogeneoussegments as the firm's target market.

The segmenter here aims at onesubmarket with one marketing mix.

TheStrategy

Developing Market-OrientedStrategies in Broad Product-

Developing Market-OrientedStrategies in Broad Product-


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gMarketsMarkets

Combined TargetMarket Approach

Multiple TargetMarket Approach

Single TargetMarket Approach

This approach segments the marketand chooses two or moresegments as the firm's target market.

The segmenter here aims at two ormore submarkets with a differentmarketing mix for each.

Strategy1

Strategy 2

Strategy3



St t i i B d P d t


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Strategies in Broad Product-

Markets

Strategies in Broad Product-

Markets Combined TargetMarket Approach

Multiple TargetMarket Approach

Single TargetMarket Approach

This approach combines two or moresubmarkets into a larger target marketas a basis for one strategy.

The combiner here aims at twosubmarkets with one marketing mix.

TheStrategy

PRODUCT DECISIONS(Md-3)


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A Product is a set of tangible and

intangible attributes, including packaging,color, price, manufacturers prestige,

retailers prestige, and manufacturers and

retailers services, which the buyer may

accept as offering want-satisfaction

The consumers are buying for want

satisfaction. Therefore a wise firm sellsproduct benefits rather just products

The three recognizable categoriesof new products are as follows: -


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of new products are as follows:

Products that are truly unique

Replacement for existing productswhich are significantly differentfrom existing goods

Imitative products or me tooproducts


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COMPONENTS OF PRODUCTPERSONALITY:


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PERSONALITY: -

The core or the basic constituent(fragrance, shape, color, Brand, Price, positioning)

The associated features (Color, shape fragrance)

The Brand Name and Logo

The Package and Label

Differences in Goods andServices

Differences in Goods andServices


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ServicesServices

TangibleTangible

Produced Then SoldProduced Then Sold

Can Store and TransportCan Store and Transport

Produced Separate

From Consumer

Produced Separate

From Consumer

IntangibleIntangible

Sold Then Produced and/or Consumed Same TimeSold Then Produced and/or Consumed Same Time

PerishablePerishable

Often Produced In

Consumer's Presence

Often Produced In

Consumer's Presence

GoodsGoods ServicesServices

Brandingr

anding

Branding means the use of a name term symbol or

Branding means the use of a name, term, symbol, or


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Branding means the use of a name, term, symbol, ordesign -- or a combination of these -- to identify a

product.

A Brand Name is a word, letter, or group of words orletters.

A Trademark includes only those words, symbols, ormarks that are legally registered for use by a single

company.

A Service Mark is the same as a trademark except thatit refers to a service offering.

Branding means the use of a name, term, symbol, ordesign -- or a combination of these -- to identify a

product.

A Brand Nameis a word, letter, or group of words orletters.

A Trademark includes only those words, symbols, ormarks that are legally registered for use by a single

company.

A Service Mark is the same as a trademark except thatit refers to a service offering.

Product Offer can range from the Generic to

the Potential


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The Generic Product (unbranded, undifferentiatedProducts, Rice, sugar, cloth)

The Branded Product-(Annapurna atta, Sprinkle) The Diffentiated Product-(Dettol soap, Maggi)

The Customized Product- (IT and Telecom) The Augmented Product- (enhanced value through

research- Titan travel clock with case, VIP suitcase with wheels)

The Potential Productor tomorrows

products (robot)

PRODUCT MIX & PRODUCTLINE The Product mix is the full list of all products


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LINE The Product mix is the full list of all productsoffered for sale by a company. The product mix

is composed of several product lines.

A group of closely related products constitutes a

Product line.

Width of Product mix: - denotes the number ofproduct lines

Length of Product line: - the number of items &

brands in the Line.

Depth of Product line: - assortment of colors,sizes, models, offered within each product line.

MAJOR PRODUCT-MIX STRATEGIES


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Expansion of Product Mix

Contraction of Product Mix

Alteration of Existing Products

PRODUCT MANAGEMENTPRODUCT MANAGEMENT

P d i h i


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Product management means managing the variousProduct management means managing the various

product lines and the overall product mix of theproduct lines and the overall product mix of thecompany. This is also known as product policy.company. This is also known as product policy.

How many different product lines should the firmHow many different product lines should the firm

accommodate?accommodate?

How can this be grouped for effectiveHow can this be grouped for effective

management?management?

With in a product line what should be theWith in a product line what should be the

composition like?composition like? How to position these products in the market?How to position these products in the market?

What should be the brand policy? Should there beWhat should be the brand policy? Should there be

individual brands or family brands?individual brands or family brands?


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yy

What should be approach to brand extensionWhat should be approach to brand extension

(extending a brand name to more products e.g.(extending a brand name to more products e.g.

sunrise premium, sunrise extra coffee. Maggisunrise premium, sunrise extra coffee. Maggi

noodles, Maggi Ketchup, Magi soup)noodles, Maggi Ketchup, Magi soup)

How to develop brand equity?How to develop brand equity? How to plan for new products?How to plan for new products?

How to handle the products going throughHow to handle the products going through

different stages of their life cycle? What are thedifferent stages of their life cycle? What are the

strategic treatments they require?strategic treatments they require?


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PRODUCT DIFFERENTIATION AND


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PRODUCT DIFFERENTIATION ANDPOSITIONING

The product can be differentiated along

two major planks:

Tangible product attributes and functionsand

Intangible characteristics and emotional

associations For differentiation to succeed, it should

be perceptible and should be rooted in

competitive advantage.


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PRODUCT MANAGEMENT

Product management means managing

the various product lines and the overall

product mix of the company.

This is also known as product policy.


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PRODUCT MANAGEMENT

How many different product lines should the firm

accommodate?

How can this be grouped for effective

management?

With in a product line what should be the

composition like? How to position these products in the market?

What should be the brand policy? Should there

be individual brands or family brands?


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PRODUCT MANAGEMENT

What should be approach to brand extension

(extending a brand name to more products e.g.

sunrise premium, sunrise extra coffee. Maggi

noodles, Maggi Ketchup, Magi soup)

How to develop brand equity?

How to plan for new products?

How to handle the products going throughdifferent stages of their life cycle? What are the

strategic treatments they require?


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PRODUCT DIFFERENTIATION AND


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POSITIONING

The product can be differentiated along two

major planks:

Tangible product attributes and functions&

Intangible characteristics and emotional

associations

For differentiation to succeed, it should beperceptible and should be rooted in competitive

advantage


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Tangible Product Attributes & Functions

Ingredients/formula (Close-up Gel, Promise Clove oil)

Functional - Standard furukawa maintenance free)

Highlighting quality dimension-Additionalfeatures (VIP suit case with wheels, pen with note check)

Packaging (Fruity in tetra pack, Brylcream in tube)

Design superiority (Titans 500 trend designs)

Product quality, technology, service: -(Godrej,(Maruti, Titan, TVS Worlpool)

Intangible Characteristics and Emotional


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Intangible Characteristics and EmotionalAssociations

Dinesh Suitings: differentiation is built

around prestige by using Sunil Gavaskaras the model.

Denesh Suitings .. the world in yourstride.

Ray Ban : Ray ban for exhilaration! It isthe lifestyle that is projected.


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PRODUCT POSITIONING

A PRODUCTS POSITION IS THE IMAGE THATTHE PRODUCT PROJECTS IN RELATION TOCOMPETITIVE PRODUCTS AND TO OTHER

PRODUCTS MARKETED BY THE SAME COMPANY All marketing strategy is built on STP

Segmentation, Targeting, and Positioning. If acompany does an excellent positioning, then it canwork out the rest of its marketing planning anddifferentiation for its positioning strategy.

Positioning is a platform for the brand. It helps thebrand to get through to the target customer

Positioning is the act of designing the

companys offering and image to occupy a

distinctive place in the mind of the target market


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distinctive place in the mind of the target market.

Positioning is what you do to the mind of theprospect, i.e. You position the product in the

mind of the prospect.

The aim of product positioning is to create a

perception for our brand in the prospects mindso that it stands apart from the competing

brands.. We must cover that space in the

customers mind as if we had won a long-term

lease. We must find a strong position in thatmind and sit on it. (Sengpta- in his book Brand

Positioning)

POSTIONING STRATEGIES:-


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Positioning in relation to competitor

Positioning by product attribute (with samefeature or benefit)

Positioning by price and quality

Positioning in relation to product use

Positioning in relation to product class (no sugaritems)

MAIN CONCERNS IN POSITIONING


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A Product cannot be Every thing to Everyone;Hence, the importance of Positioning

Positioning means putting the product

in a predetermined orbit

Connects product offering with Target Market

While positioning a brand, the firm has to reckon

Competitors especially the leaders positioning


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PRODUCT POSITIONING & BRANDPOSITIONING


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Product positioning denotes the specific

product category/product class, inwhich the given product is opting to

compete in the market.

Brand Positioning denotes the

positioning of the brand as against the

competing brands in the chosenproduct category.

BRAND MANAGEMENT A Brand is a name, term, symbol, design, or a


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y gcombination of them , which is intended to

identify the goods and services of one seller andto differentiate them from those of competitors.

When a brand mark is registered and legalized it

becomes a Trade mark. Brand is a significantselling tool in the market. Strong brands aremajor assets for companies.

A brand name consists of words, letters, ornumbers that can be vocalized.

Main tasks in managing a Brand: - Selection of Brand name and Logo


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Keeping it alive through: -

Brand extensions- (Dettol soap, Plaster, hand wash)

Brand rejuvenation (New Horlicks, New Vicks Vaprub)

Brand re-launches ( New santoor, Close-up red &blue Brand proliferation (adding more brands to the line)

Brand acquisition or take over

Monitoring the brand through its PLC

Brand portfolio rationalization/restructure

Monitoring brand equity


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CHARACTERISTICS OF A GOODBRAND NAME


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Easy to spell, read and pronounce

Suggestive of product benefits

Distinctive

Adaptable to new products

Capable of being registered

Adaptable to any advertising medium

No negative imagery

Adaptable for international markets (Kodak, CocoCola)

ConditionsFavorable

ConditionsFavorable1. Easy to identify by brand

or trademark

1. Easy to identify by brandor trademark


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to

BuildingBrandFamiliarity

to

BuildingBrandFamiliarity

2. Quality is best value forthe price

2. Quality is best value forthe price

3. Dependable and wide-spread availability

3. Dependable and wide-spread availability

4. Demand for general

product class is large

4. Demand for general

product class is large

5. Demand supports priceneeded to support brand

5. Demand supports priceneeded to support brand

6. Economies of scale

possible

6. Economies of scale

possible

7. Favorable shelf locationspossible

7. Favorable shelf locationspossible

SevenConditions

Favorable to

SuccessfulBranding

SevenConditions

Favorable to

SuccessfulBranding

Levels of BrandFamiliarity

Levels of BrandFamiliarity

Rejection

Rejection

Ch P iti

Focus:


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RejectionRejection

Non-recognitionNon-recognition

RecognitionRecognition

PreferencePreference

InsistenceInsistence

Change Position

Increase Awareness

Continue Education

Maintain Availability

Develop High

Brand Equity

Focus:

Focus:

Focus :

Focus :

PRODUCT LIFE CYCLE FOUR DISTINCT STAGES IN PLC:-


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MARKET PIONEERING STAGE MARKET GROWTH STAGE

MARKET MATURITY STAGE

MARKET DECLINE STAGE

The competitive environment and the

resultant marketing strategies will differdepending upon the stage.

The Product LifeCycle

The Product LifeCycle


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CycleCycle

Total

IndustrySales

Total IndustryProfit

+

-

Rs.0

Market

Introduction

Market

Growth

Market

Maturity

Sales

Decline

Time

Sales growslowly, ata cost

Sales growslowly, ata cost

Salesgrowth, butprofits leveloff

Salesgrowth, butprofits leveloff

Saleslevels, butprofitsdecline

Saleslevels, butprofitsdecline

Manage it orsay goodbye

Manage it orsay goodbye

Avoid Confusion about PLC Applies to whole product-market, not individual brand


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individual brands may come and go

Each market may have a different cycle Timing of stages may vary substantially

Strategy must change over time, and what you do early may

conflict with where you want to be later

Total

IndustrySales

Total IndustryProfit

+

-

Rs 0

MarketIntroduction

MarketGrowth

MarketMaturity

SalesDecline

Time

Market Pioneering Stage: -


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Teething troubles, low sales, less or no

profit, demand has to be created,customers have to be prompted to buy.

Pricing strategy to be adopted is critical in

this stage (Market skimming and Penetration)

High Pricing Low Pricing

MARKET GROWTH STAGE


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Demand for product increases and thesize of market grows. Competition-

oriented pricing and efficiency in

marketing and distribution are the

important factors in this stage.

MARKET MATURITY STAGE During this stage demand tends to reach a


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g g

saturation point. Prince competitionbecomes intense. Product differentiation

and Brand loyalty has to be built up.

Sales promotional activities, special

offers, packaging modifications, areimportant.

Low prices, increased marketing costs,

heavy competition and lesser profits arethe characteristics of this stage.

MARKET DECLINE STAGE Sales begin to fall, and Demand declines due to


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g ,the advent of new and functionally advancedproduct in the market.

At this stage management has the followingalternatives: -

Improve the product in functional sense Improve efficiency in Marketing & production Pruning unprofitable models and sizes

Cost control and cost cutting Abandon the product.

NEW PRODUCTDEVELOPMENTClassification of New Products:-


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C ass cat o o e oducts

New Products arising out of technologicalinnovations

New Products arising out of marketing-

oriented modifications The first group includes new products

having new functional utility

The second group includes innovations

on existing products.

New-Product DevelopmentProcess



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Idea

Generation

Idea

Generation ScreeningScreening Idea

Evaluation

Idea

EvaluationDevelop-

ment

Develop-

mentCommer-

cialization

Commer-

cialization

Process tries to generate many differentideas for new products but then we try tofigure out why it will NOT work so that wecan get rid bad alternatives and NARROWDOWN to focus our time and money on theattractive opportunities that have aprayer of success

Process tries to generate many differentideas for new products but then we try tofigure out why it will NOT work so that wecan get rid bad alternatives and NARROWDOWN to focus our time and money on theattractive opportunities that have aprayer of success




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Idea

Generation

Idea

Generation

Consciously organize to get ideas frommany sources:

customers and users marketingresearch

competitors other markets

Consciously organize to get ideas frommany sources:

customers and users marketingresearch

competitors other markets




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Idea

Generation

Idea

Generation ScreeningScreening

Consider strengths and weaknessesrelative to product concept

Evaluate fit with objectives and resources,including rest of marketing program

Analyze market trends

Get a rough ROI estimate, consideringshort and long-term customer satisfaction

Consider strengths and weaknessesrelative to product concept

Evaluate fit with objectives and resources,including rest of marketing program

Analyze market trends

Get a rough ROI estimate, consideringshort and long-term customer satisfaction


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Idea

Generation

Idea

Generation ScreeningScreeningIdea

Evaluation

Idea

EvaluationDevelop-

ment

Develop-

ment

R&D Develop model or

service prototypeTest marketing mix Revise plans asneeded

ROI estimate

R&D Develop model or

service prototypeTest marketing mix Revise plans asneeded

ROI estimate

PACKAGINGDECISIONS Packaging may be defined as the general group

f ti iti i d t l i hi h i l


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of activities in product planning which involve

designing and producing the container orwrapper for a product

Protection, Convenience and economy were the

three important traditional purposes attached to

package.

Today Packaging is becoming a truly

competitive edge in marketing of consumer

products.

New packaging materials have replaced the

traditional ones, new shapes, size, closures etc.

CLASSIFICATION OFPACKAGING Transit Packaging for the process of


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g g p

distribution) Consumer Packaging (meant for

delivering goods to consumer)

Family Packaging (Products of amanufacturer packed in an identical way)

Reuse Packaging (Containers of Ghee,

Biscuit Tins, Horlics Jars)

Multiple Packaging (Placing several units

in one container)

PackagingStrategies

M ff P k


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g Money off Pack Coupon Pack Pack in Premium (gift inside) Re-Use Packaging

Self-liquidator (return of emptyfoils/wrappers/packs) Changing the Package Packaging the Product Line (use of identical

packing for all products) Multiple Packaging (Placing several units in

one container)

LABELING

A label is an information tag, wrapper or a sealtt h d t d t d t k


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attached to a product or a products package.

The important information provided by the labelis the name of the product, name of theproducer, quality, contents inside, weight, dateof production and expiry, important warnings,instructions to use, batch and lot no, MRP etc

The Packaged Commodities (Regulations) Order1975 makes it obligatory on the part of

manufacturers to show the above mentioned

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