KOTLER KRASHERMarketing Mantra

Lets get serious for a moment !IIM Kozhikode111-2 Product or Offering Value and SatisfactionNeeds, Wants, and Demands Exchange & TransactionsRelationships & Networks Target Markets & Segmentation Marketing Channels Supply Chain Competition Marketing EnvironmentCore Concepts of Marketing3Quick definitionsMarketing Environment: refers to factors and forces that affect a firms ability to build and maintain successful relationships with customers. Three levels of the environment are: Micro (internal) environment - small forces within the company that affect its ability to serve its customers. Meso environment the industry in which a company operates and the industrys market(s). Macro (national) environment - larger societal forces that affect the microenvironment.

Supply Chain : It is a system of organizations, people, activities, information, and resources involved in moving a product or service from supplier or customer.

Marketing Channels : A marketing channel is a set of practices or activities necessary to transfer the ownership of goods, and to move goods, from the point of production to the point of consumption and, as such, which consists of all the institutions and all the marketing activities in the marketing process

Product/offering : is anything that can be offered to a market that might satisfy a want or need.Quick definitionsIIM Kozhikode4Needs : is something that is necessary for organisms to live a healthy life.

Wants : are a step ahead of needs and are largely dependent on the needs of humans themselves.

Demand : is an economic concept that describes a buyer's desire, willingness and ability to pay a price for a specific quantity of a good or service.

Target market : is a group of customers that the business has decided to aim its marketing efforts and ultimately its merchandise towards.

Segmentation : is a marketing strategy that involves dividing a broad target market into subsets of consumers who have common needs, and then designing and implementing strategies to target their needs and desires using media channels and other touch-points that best allow to reach them.1-5PricePromotionCostCommunicationMarketingMixProductPlaceCustomerSolutionConvenienceThe Famous Marketing Mix

PRODUCT/SERVICE6What does the customer want from the product/service? What needs does it satisfy?What features does it have to meet these needs?Are there any features you've missed out? Are you including costly features that the customer won't actually use?How and where will the customer use it?What does it look like? How will customers experience it?What size(s), color(s), and so on, should it be?What is it to be called? How is it branded?How is it differentiated versus your competitors?What is the most it can cost to provide, and still be sold sufficiently profitably? PLACE7Where do buyers look for your product or service? If they look in a store, what kind? A specialist boutique or in a supermarket, or both? Or online? Or direct, via a catalogue? How can you access the right distribution channels? Do you need to use a sales force? Or attend trade fairs? Or make online submissions? Or send samples to catalogue companies? What do you competitors do, and how can you learn from that and/or differentiate? PRICE8What is the value of the product or service to the buyer? Are there established price points for products or services in this area? Is the customer price sensitive? Will a small decrease in price gain you extra market share? Or will a small increase be indiscernible, and so gain you extra profit margin? What discounts should be offered to trade customers, or to other specific segments of your market? How will your price compare with your competitors? MODELS OF PRICING9- Absorption pricingMethod of pricing in which all costs are recovered. The price of the product includes the variable cost of each item plus a proportionate amount of the fixed costs and is a form of cost-plus pricing.- Contribution margin-based pricingContribution margin-based pricing maximizes the profit derived from an individual product, based on the difference between the product's price and variable costs (the product's contribution margin per unit), and on ones assumptions regarding the relationship between the products price and the number of units that can be sold at that price.- Cost-Plus pricingCost-plus pricing is the simplest pricing method. The firm calculates the cost of producing the product and adds on a percentage (profit) to that price to give the selling price. This method although simple has two flaws; it takes no account of demand and there is no way of determining if potential customers will purchase the product at the calculated price.- Creaming or skimmingIn most skimming, goods are sold at higher prices so that fewer sales are needed to break even. Selling a product at a high price, sacrificing high sales to gain a high profit is therefore "skimming" the market. Skimming is usually employed to reimburse the cost of investment of the original research into the product: commonly used in electronic markets when a new range, such as DVD players, are firstly dispatched into the market at a high price.

10- Decoy pricingMethod of pricing where the seller offers at least three products, and where two of them have a similar or equal price.- FreemiumFreemium is a business model that works by offering a product or service free of charge (typically digital offerings such as software, content, games, web services or other) while charging a premium for advanced features, functionality, or related products and services.- High-low pricingMethod of pricing for an organization where the goods or services offered by the organization are regularly priced higher than competitors, but through promotions, advertisements, and or coupons, lower prices are offered on key items.- Limit pricingA limit price is the price set by a monopolist to discourage economic entry into a market, and is illegal in many countries.- Penetration pricingPenetration pricing includes setting the price low with the goals of attracting customers and gaining market share.PROMOTION11Where and when can you get across your marketing messages to your target market? Will you reach your audience by advertising in the press, or on TV, or radio, or on billboards?By using direct marketing mail shot? Through PR? On the Internet? When is the best time to promote? Is there seasonality in the market?Are there any wider environmental issues that suggest or dictate the timing of your marketlaunch, or the timing of subsequent promotions? How do your competitors do their promotions? And how does that influence your choice of promotional activity? THE 7 Ps FOR SERVICES12

Production Concept

Product ConceptSelling ConceptMarketing ConceptConsumers prefer products that are widely available and inexpensive

Consumers favor products thatoffer the most quality, performance,or innovative featuresConsumers will buy products only ifthe company aggressivelypromotes/sells these productsFocuses on needs/ wants of target markets & delivering value better than competitorsCompany Orientations Towards the MarketplaceImage valuePersonnel valueServices valueProduct valueTotalcustomervalueMonetary costTime costEnergy costPsychic costTotalcustomercostCustomerdeliveredvalueDeterminants of Customer Delivered ValueIIM Kozhikode14Measuringresults

Diagnosingresults

TakingcorrectiveactionImplementationPlanningCorporateplanning

Divisionplanning

Businessplanning

ProductplanningOrganizing

ImplementingControlStrategic Planning, Implementation, & Control ProcessIIM Kozhikode15

Limited number of goals

Stress major policies & valuesDefine competitive scopes

Good Mission Statements

IIM Kozhikode16Boston Consulting Groups Growth-Share Matrix

IIM Kozhikode17Boston Consulting Groups Growth-Share MatrixIIM Kozhikode18Boston Consulting Groups Growth-Share Matrix

IIM Kozhikode19Market Attractiveness: Competitive Position Portfolio ClassificationMARKET ATTRACTIVENESS5.003.672.331.00LowMediumHighReliefvalve

Flexiblediaphragms

Fuelpumps

Aerospacefittings

Clutches

Hydraulicpumps

Joints

StrongMediumWeakBUSINESS STRENGTH1.002.333.675.00Invest/growSelectivity/earningsHarvest/divestIIM Kozhikode204. Diversification2. MarketdevelopmentNewmarkets1. MarketpenetrationExistingmarketsExistingproducts3. ProductdevelopmentNewproductsIntensive Growth Strategies:Ansoffs Product/Market Expansion GridIIM Kozhikode21Ansoff Matrix of Coca-Cola Market PenetrationProduct Development

Market DevelopmentDiversification

IIM Kozhikode22Diet ColaCoca-Cola Share Size 1.25 L bottleFanta Icy Lemon, Coca-Cola VanillaWinnie the Pooh Roo juice, PoweradeIIM Kozhikode1423HighLowHighLowAttractivenessSuccess ProbabilityOpportunitiesOpportunity Matrix1.Company develops a more powerful lighting system2.Company develops a device for measuring the energy efficiency of any lighting system3.Company develops a device for measuring illumination level4.Company develops a software program to teach lighting fundamentals to TV studio personnel23Threat Matrix1.Competitor develops a superior lighting system

2.Major prolonged economic depression

3.Higher costs

4.Legislation to reduce number of TV studio licenses1423HighLowHighLowSeriousnessProbability of OccurrenceThreatsIIM Kozhikode24SkillsSharedvaluesStaffStyleStrategyStructureSystemsThe McKinsey 7-S Framework

IIM Kozhikode25Mc Kinsey 7S Model referenced in E-ConsultancyElements of 7S ModelApplication to Digital Marketing TeamStrategySignificant in influencing and supporting organizations strategyStructureModification of organizations structure to support digital marketing SystemsDevelopment of specific processes, procedures or ISStaffBreakdown of staff due to conflict between IT and Marketing, age, sex, etcStyleWay in which key managers behave in achieving the organizations goals and the cultural style of the organization as a wholeSkillsDistinctive capabilities of key staff . Can be interpreted as specific skill-set team membersSuper-Ordinate Goals/Shared ValuesGuiding concepts of the digital marketing organization. These are evidenced in the corporate culture and the general work ethicIIM Kozhikode26Sell the productMake the productProcureDesignproductMakePriceSellAdvertise/promoteDistributeService(a) Traditional physical process sequence(b) Value creation & delivery sequenceChoose the ValueProvide the ValueCommunicate the ValueStrategic marketingTactical marketingThe Value-Delivery ProcessIIM Kozhikode27Executive Summary & Table of ContentsCurrent Marketing SituationOpportunity & Issue AnalysisObjectivesMarketing StrategyAction ProgramsProjected Profit-and-lossControlsThe Marketing PlanIIM Kozhikode28Defining the Problem & Research ObjectivesExploratoryResearchDescriptiveResearchCausalResearchTest cause-and-effect relationships.Tests hypotheses about cause- and-effect relationships.Sheds light on problem - suggest solutions ornew ideas.

Ascertain magnitudes.IIM Kozhikode29Research ApproachesBehavioral

Focus-group

SurveyExperimental

Observational

IIM Kozhikode30Secondary Data SourcesInternal SourcesGovernment PublicationsPeriodicals and BooksCommercial DataOn-LineAssociationsBusiness Information

IIM Kozhikode31The Marketing Research ProcessDefining theproblem andresearchobjectivesDevelopingthe researchplanCollect the informationAnalyze theinformationPresent thefindingsIIM Kozhikode32Good Marketing Research... Is scientific (based on observation, hypothesis, prediction & testing) Is creative (innovative ways to solve a problem) Uses multiple methods (to avoid over reliance on one method) Realizes interdependence of models & data Acknowledges the cost & value of information Maintains healthy skepticism (little reliance on stereotyped assumptions) Is ethicalIIM Kozhikode33Buyers decisionprocess

Problem recognitionInformation searchEvaluationDecisionPost-purchase behaviorOtherStimuli (Environmental)

EconomicTechnologicalPoliticalCulturalBuyerscharacteristics

CulturalSocialPersonalPsychologicalBuyers decisions

Product choiceBrand choiceDealer choicePurchase timingPurchase amountMarketingStimuli (Product Mix)

ProductPricePlacePromotionModel of Buying BehaviorIIM Kozhikode3434Cultural (Culture, Sub-Culture, Social Class)Social (Reference groups, Family, Roles & Status)Personal (Age & Life Cycle, Occupation, Lifestyle, Personality) Psychological (Motivation, Perception, Beliefs) BuyerCharacteristics Affecting Consumer BehaviorIIM Kozhikode353532Characteristics Affecting Consumer BehaviorCulture: The most basic influence on a person's values, priorities, and beliefs. Cultural shifts make marketing opportunities, although most changes are in secondary rather than core cultural values. Subcultures are important markets as these groups often differ in their needs and warrant different marketing approaches.Social: Social class is determined by a combination of income, occupation, education, wealth, and other variables. Social factors in one's class affecting behavior include reference groups & aspirational groups. Families also exert strong social influences. Finally, each relationship a person has with his or her group carries with it certain roles and status that may carry consumptive responsibilities.Personal: Major personal factors are age and life cycle stage, occupation, economic situation, life style and personality/self-concept. Texts vary in their treatment of the PLC stages but it is clear that singles buy different products than do young marrieds with small children. Occupations differ in time constraints and social pressures to conform that affect consumption decisions. Lifestyles reveal similar consumption patterns across otherwise dissimilar groups. The unique characteristics of each person that make up their personality also affect behavior.Psychological: Maslow's hierarchy says that need states vary in their intensity or motivation. Perception is the process of organizing stimuli and is influenced by selective exposure, distortion, & retention. Learning occurs in response to information linked to relevant drives, cues, responses, and reinforcement, only some of which is under the control of the marketer. Beliefs and attitudes, though shaped by cultural and social forces, may vary considerably by individual.Consumer Buying RolesDecider (One who takes finaldecision about when & whereto buy) Buyer (One who actually makes the purchase) User (Consumes or uses the product/service) Influencer (Provide view and advice)Initiator (First individual toSuggest purchase)KeyFamilyDecisionRolesIIM Kozhikode363676Consumer Buying RolesConsumer Buying Roles IncludeInitiator -- the person who first suggests/thinks of buying a particular product or service. For example, Bill may suggest a Disney World trip for a family vacation.Influencer -- the person whose views or advice carries some weight in the final decision. This person may also influence the decision criteria used. For example, Dad's feelings about Florida may influence the Disney trip.Decider -- the person who authorizes the purchase. Mom's vacation time may be limited by her job schedule, so she decides when and where the family goes.Buyer -- the person who actual makes the purchase. For example, Jane may telephone the reservation at Disney World once given the authorization.User -- the person who consumes the product. For example, the whole family would use the Disney product. For equipment purchases like computers at universities, it might be students enrolled in courses coming to the computer lab.ComplexBuyingBehavior (eg. Bike, Car)Dissonance-Reducing BuyingBehavior(eg. Floor Tiles)Variety-SeekingBehavior (eg. Washing Detergent)HabitualBuyingBehavior(eg. Toothpaste)SignificantdifferencesbetweenbrandsFewdifferencesbetweenbrandsHighInvolvementLowInvolvementFour Types of Buying BehaviorIIM Kozhikode37ProblemrecognitionInformationsearchEvaluation ofalternativesPurchasedecisionPost-purchasebehaviorConsumer Buying ProcessIIM Kozhikode38TotalSetAware-nessSetConsid-erationSetChoiceSetDecisionDecision Making SetsIIM Kozhikode39Potential Entrants(Threat ofMobility)Buyers(Buyer power)Substitutes(Threats ofsubstitutes)Suppliers(Supplier power)IndustryCompetitors(Segment rivalry)Five Forces Determining Segment Structural AttractivenessIIM Kozhikode40Starbucks Porters Five Forces AnalysisRivalry among existing competitorsis high within the industry Starbucks operates in with major competitors like Costa, McDonalds, Caribou Coffee, and Dunkin Donuts and thousands of small local coffee shops and cafes.

Starbuckscustomers possess large amount of bargaining powerbecause there is no and minimal switching cost for customers, and there is an abundance of offers available for them.

Thethreat of substitute products and servicesfor Starbucks is substantial. Specifically, substitutes for Starbucks Coffee include tea, juices, soft drinks, water and energy drinks, whereas pubs and bars can be highlighted as substitute places for customers to meet someone and spend their times outside of home and work environments.

Starbuckssuppliers have high bargaining powerdue to the fact that the demand for coffee is high in global level and coffee beans can be produced only in certain geographical areas. Moreover, the issues associated with African coffee producers being treated unfairly by multinational companies are being resolved with the efforts of various non-government organisations, and this is contributing to the increasing bargaining power of suppliers.

However,the threat of new entrantsto the industryto compete with Starbucks is low, because the market is highly saturated and substantial amount of financial resources associated with buildings and properties are required in order to enter into the industry.IIM Kozhikode41Specific Attack StrategiesPrice-discountCheaper goodsPrestige goodsProduct proliferationProduct innovationImproved servicesDistribution innovationManufacturing cost reductionIntensive advertising promotionIIM Kozhikode421. Identify Basesfor Segmenting the Market2. Develop Profilesof Resulting Segments3. Develop Measuresof Segment Attractiveness4. Select TargetSegment(s)5. Develop Positioningfor Each Target Segment6. Develop MarketingMix for Each Target SegmentMarketPositioningMarketTargetingMarket SegmentationSteps in Segmentation, Targeting, & Positioning

IIM Kozhikode4343Steps in Segmentation, Targeting, and PositioningSteps in Segmentation, Targeting, and PositioningMarket Segmentation. Market segmentation is the process of dividing a market into distinct groups of buyers who might require separate products or marketing mixes. All buyers have unique needs and wants. Still it is usually possible in consumer markets to identify relatively homogeneous portions or segments of the total market according to shared preferences, attitudes, or behaviors that distinguish them from the rest of the market. These segments may require different products and/or separate mixes.Market Targeting. Market targeting is the process of evaluating each market segment's attractiveness and selecting one or more segments to enter. Given effective market segmentation, the firm must choose which markets to serve and how to serve them. Discussion Note: In targeting markets to serve the firm must consider its resources and objectives in setting strategy. Market Positioning. Market positioning is the process of formulating competitive positioning for a product and a detailed marketing mix. Marketers must plan how to present the product to the consumer. Discussion Note: The product's position is defined by how consumers view it on important attributes.

Bases for Segmenting Consumer MarketsOccasions, Benefits, Uses, or AttitudesBehavioralGeographicRegion, City or MetroSize, Density, Climate

DemographicAge, Gender, Family size and Fife cycle, Race, Occupation, or Income ...Lifestyle or PersonalityPsychographicIIM Kozhikode44Product DifferentiationFormFeaturesPerfor-manceQuality ConformanceQualityDurabilityReliabilityRepair-abilityStyleDesignIIM Kozhikode45Differences Worth EstablishingAffordableSuperiorProfitablePreemptiveDistinctiveImportant

IIM Kozhikode46 the act of designing the companys offering and image to occupy a distinctive place in the target markets mind. Positioning is...

Once an idea has taken hold of the brain it's almost impossible to change... An idea that is fully formed - fully understood - sticks; right in there somewhere.IIM Kozhikode47IdeaGenerationConceptDevelopmentand TestingMarketingStrategyDevelopmentIdeaScreeningBusinessAnalysisProductDevelopmentMarketTestingCommercializationNew Product Development ProcessIIM Kozhikode48What is a Brand?AttributesBenefitsValuesCultureUserPersonalityIIM Kozhikode49Brand StrategiesBrandExtensionNewBrand NameProduct CategoryLineExtensionExistingExistingMultibrandsNewNewBrandsEXAMPLES: Line extension - a new variant of Dove. Brand extension - Nike launching a deodorant. Multi brands- Audi and Skoda both owned by Volkswagon New Brands Horlicks entering the instant noodles market with its brand FoodlesIIM Kozhikode50Setting Pricing Policy1. Selecting the pricing objective2. Determining demand

3. Estimating costs

Analyzing competitors costs, prices, and offers

5.Selecting a pricing method

6. Selecting final price

IIM Kozhikode51The Three Cs Modelfor Price SettingCostsCompetitorsprices andprices ofsubstitutesCustomersassessmentof uniqueproductfeaturesLow Price

No possibleprofit atthis priceHigh Price

No possibledemand atthis priceIIM Kozhikode52New Product PricingMarket Skimming PricingMarket Penetration PricingSetting a high price for a new product to skim maximum revenues layer by layer from the segments willing to pay the high price: the company makes fewer but more profitable sales.CONDITIONSA sufficient number of buyers have a high current demand;The unit costs of producing a small volume are not so high that they cancel the advantage of charging what the traffic will bear;The high initial price does not attract more competitors to market;The high price communicates the image of a superior product.

Setting a low price for a new product in order to attract a large number of buyers and a large market share.

CONDITIONSThe market is highly price sensitive, and a low price stimulates market growth;Production and distribution costs fall with accumulated production experience;A low price discourages actual and potential competition.

IIM Kozhikode53Pricing adjustment strategiesDiscount PricingSegmented PricingPsychological PricingPromotional PricingGeographical PricingCash discountQuantity discountFunctional discountSeasonal discountAllowanceCustomer segmentProduct formLocationTimeArtificial time constraintCharm pricingInnumeracy- include lots of numbersPrice appearanceLoss-leader pricingSpecial-event pricingCash rebatesLow-interest financingLonger payment termsWarranties & service contractsPsychological discounting

FOB-origin pricingUniform-delivered pricingZone pricingBasing-point pricingFreight-absorption pricing

IIM Kozhikode54Price reaction program for meeting a Competitors Price CutNoHold our priceat present level;continue to watchcompetitorspriceIs the pricelikely tosignificantlyhurt our sales?YesIs it likely to bea permanentprice cut?YesBy more than 4%

Drop price tocompetitorspriceBy 2-4%

Drop price byhalf of thecompetitorsprice cutHow much hashis price beencut?YesNoNoBy less than 2%

Include acents-off couponfor the nextpurchaseHas competitorcut his price?IIM Kozhikode55AdvertisingPersonal SellingAny Paid Form of Non-personal Presentation by an Identified Sponsor.Sales PromotionShort-term Incentives to Encourage Trial or Purchase.Public RelationsDirect MarketingDirect Communications With Individuals to Obtain Immediate Response.Protect and/or Promote Companys Image/products.Personal Presentations.The Marketing Communications MixIIM Kozhikode5656The Marketing Communications MixThis CTR relates to the material on pp. 422-423.Tools of The Marketing Communications MixAdvertising. Advertising is any paid form of nonpersonal presentation and promotion of ideas, goods, or services by an identified sponsor. Advertising often utilizes mass media and may be adapted to take advantages of a given mediums strengths to convey information.Sales Promotion. Sales promotions consist of short-term incentives to encourage purchase of sales of a product or service. Limited time offers or dated coupons are common sales promotions.Public Relations. Public relations is an on-going process of building good relations with the various publics of the company. Key elements in the process are obtaining favorable publicity, building and projecting a good "corporate image," and designing an information support and response team to respond proactively to unfavorable rumors, stories, or events. Personal Selling. Personal selling describes the use of oral presentations in a conversation with one or more prospective buyers for the purposes of making a sale. Personal selling combines product information and benefits with the interpersonal dynamics of the sales person. Good interpersonal relationship skills and effective oral communication skills are needed for personal selling.Direct Marketing. Directed communications with carefully targeted individual consumers to obtain an immediate response.

AdvertisingPublic, Pervasive, Expressive, ImpersonalSales PromotionCommunication, Incentive, InvitationPublic Relations & PublicityCredibility, Surprise, DramatizationPersonal SellingPersonal Confrontation, Cultivation, ResponseDirect MarketingNonpublic, Customized, Up-to-Date, InteractiveStep 6: Decide on Communications MixIIM Kozhikode5757ServicesAn economic activity that does not result in ownershipBenefits are IntangibleProducts consumed for the service provided by them rather than for physical possession

IIM Kozhikode58Service Continuum

Services against GoodsIIM Kozhikode59Services Categories

Service CycleIIM Kozhikode60Satisfaction and Loyalty

Consequence of Loyalty

IIM Kozhikode61Marketing communication: Refers to the means by which firms attempt to inform, persuade, and remind consumers, directly or indirectly, about the products and brands they sell.

Ad Objective: Informative, Reminder, Persuasive, Reinforcement Developing Effective CommunicationsIdentify target audienceDetermine objectivesDesign communicationsSelect channelsEstablish budgetDecide on media mixMeasure results/ manage IMCIIM Kozhikode6262Advertising

Any paid form of non-personal presentation and promotion of ideas, goods, or services by an identified sponsor.Creative Decision Filter:Apples Brand pyramid

Kellers CBBE modelCBBE: customer based brand equityKellers CBBE model for Amazon

IIM Kozhikode63 Thank You!

IIM Kozhikode64