Marketing

A Philosophy

An Attitude

A Perspective

A Management Orientation

A Set of Activities

1

The Purpose of Marketing

• To understand the Needs & Wants of Customers

• To create customer value through satisfaction and loyalty

• To operate more effectively and efficiently than competitors

• To increase the value of the organization

2

Core Marketing ConceptsCore Marketing Concepts

Products, Services,

Experiences

Value and satisfaction

Needs, wants,and demands

Exchange, transactions,and relationships

Markets

CoreMarketingConcepts

CoreMarketingConcepts

3

Marketing Management Process

Marketing Management Process

• Stage 1: Identifying marketing opportunities or problems.– Understand major environmental forces that create both

opportunities and threats.• Stage 2: Market Segmentation, targeting, and positioning.

– : Identify the most promising segment (s) and consider how to satisfy the customers that have homogeneous needs within each segment.

• Stage 3: Understanding the customers.– Design a new product by understanding potential customers’ needs

and purchasing patterns. • Stage 4: Developing a marketing mix.

– Design a competitive marketing strategy by blending product, price, promotion, and place strategies.

• Stage 5: Managing the marketing efforts.– Measure and evaluate the performances of current marketing

strategy.4

Evolution of Business Models and the role of Marketing

Societal

Mktg

MarketingProduct varietySellingProduction

As business philosophy has evolved, so has the role of marketing…customer

satisfaction is now at the core

As business philosophy has evolved, so has the role of marketing…customer

satisfaction is now at the core

5

Product Orientation vs. Market Orientation

Company Product Market

Indian Railways We run rail services

We are a people-and-goods mover

Xerox We make copying equipment

We improve office productivity

Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We entertain people

6

The Marketing Concept itself has evolved from..

1) Catering to the customer1) Catering to the customer

2) Anticipating the customer2) Anticipating the customer

3) Fulfilling the customer3) Fulfilling the customer

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9

Old vs New marketingChallenges for Marketing in 21st century

Speed ?….Outrun….?

10

11

Some New-Age Marketing Trends

• Relationship Marketing

• Database Marketing

• Network Marketing

• Permission or Interruption marketing

• Viral Marketing

• Ambush Marketing

12

So…Marketing is managing..

Connecting withCustomers

TechnologyRelationships

Glo

bal A

llian

ces

Diverse Demands

Ethics

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Fundamental Goals of MarketingFundamental Goals of Marketing• Goal 1: Attracting Customers:

– Attract new customers by promising superior value and create transactions with them.

– known as the leaky bucket approach.• Goal 2: Retaining and Growing Customers:

– Satisfied customers are more likely to be loyal customers, and loyal customers are more likely to give the company a larger share of their business in the long run.

– Retention strategy: Retain current customers for maintaining profitable long-term relationships with them by delivering superior value and customer satisfaction.

Has this

changed ?

??

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What is marketing all about?

15

Marketing Strategy Process

Market Analysis (The 4 C’s)

Customers Company Competitors Collaborators

Market Segmentation

Product and ServicePositioning

Customer Acquisition Customer Retention

CreatingValue

TargetMarket Selection

Product and Service

Marketing Mix (The 4 P’s )

Place/Channels Promotion

Pricing

Profits

Creating Value

CapturingValue

SustainingValue

16

Stakeholder Management- beyond marketing

17

What is sustainability?

18

Why is it important to achieve both satisfaction and loyalty?

19

Satisfaction is a person’s feelings of pleasure or disappointment resulting from comparing a product’s perceived performance (or outcome) in relation to his or her expectations.

20

Satisfaction & Loyalty

Outcomes:– Sales to increase revenues– Less price sensitivity– Lower organization’s costs

Satisfaction:Feelings from experience

Loyalty:Choice of brand

over others

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Value and Satisfaction:Value and Satisfaction:

– Customers choose a product that provides the maximum perceived value among many marketing offers.• Customer perceived value = total benefits – total

costs.• Total benefits: product features, services,

information, and experiential values.• Total costs: monetary, time, and psychological costs.

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Determinants of Customer Delivered Value

Image valueImage value

Personnel valuePersonnel value

Services valueServices value

Product valueProduct value

Totalcustomer

value

Totalcustomer

value

Monetary costMonetary cost

Time costTime cost

Energy costEnergy cost

Psychic costPsychic cost

Totalcustomer

cost

Totalcustomer

cost

Customerdelivered

value

Customerdelivered

value

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Customers

Front-line people

Middle Management

TopManagement

Traditional Organization Chart

24

Customer-Oriented Organization Chart

Customers

Front-line people

Middle management

Topmanage-

ment

Customers Cus

tom

ers

25

Inactive orex-customers

Customer Development

PartnersAdvocatesClientsRepeatcustomers

First-timecustomers

Suspects

Prospects

Disqualifiedprospects

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Marketing Strategy

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Marg

in

Marg

inThe Generic Value Chain

Primary Activities

Su

pp

ort

Acti

viti

es

Procurement

Serv-ice

Technology Development

Human resource management

Firm infrastructure

InboundLogistics

Opera-tions

Out-bound

Logistics

Market-ingand

sales

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Market-Oriented Strategic Planning

Objectives

Skills

Resources

Opportunities

Profitand

Growth

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Growth Strategies: Ansoff’s Product/Market Expansion Grid

4. Diversification2. Marketdevelopment

Newmarkets

1. Marketpenetration

Existingmarkets

Existingproducts

3. Productdevelopment

Newproducts

Marketing Environment

What is ?

How to analyze? For what?

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Actors in the Microenvironment

The Company’s Macroenvironment

Economic Factors

• Inflation• Employment• Disposable income• Business cycles• Energy availability and cost• Others?

Technological Factors

• New discoveries and innovations• Speed of technology transfer• Rates of obsolescence• Internet; Mobile ; Cloud and

Information processing technology–Platforms and Portability–Copy/Clone

Political/legal Factors

• Monopolies legislation• Environmental protection laws• Taxation policy• Employment laws• Government policy• Legislation• Others?

Political Environment

Includes Laws, Government Agencies, and Pressure Groups that Influence or Limit Various Organizations and Individuals In a Given Society.

Increasing Legislation

Changing GovernmentAgency Enforcement

Increased Emphasis on Ethics& Socially Responsible Actions

Sociocultural factors

• Demographics• Distribution of income• Social mobility• Lifestyle changes• Consumerism• Levels of education

The Cultural Environmentinstitutions and other forces that affect a society’s basic values, perceptions,

preferences, and behaviors.

• Core beliefs are persistent– Passed from parents

to children; reinforced by society

– Shape attitudes and behavior

• Secondary cultural values change and shift more easily

• Society’s cultural values are expressed through people’s views of:– Themselves– Others– Organizations– Society– Nature– The Universe

The Marketing Environment and Competitor Analysis

• Five forces analysis • SWOT analysis

Threat ofsubstitutes

Potentialentrants

Threat ofentrants

Suppliers

Bargaining power

Substitutes

Buyers

Bargaining power

COMPETITIVE RIVALRY

Porter’s Five forces analysis

Five Forces Analysis: Key Questions and Implications

• What are the key forces at work in the competitive environment?

• Are there underlying forces driving competitive forces?

• Will competitive forces change?• What are the strengths and weaknesses of

competitors in relation to the competitive forces?• Can competitive strategy influence competitive forces

(eg by building barriers to entry or reducing competitive rivalry)?

Responding to the Marketing Environment

• Reactive: Passive Acceptance and Adaptation; Avoidance

• Proactive: Environmental Management and New Product Development

Customer/Product Profitability Analysis

P1

Highlyprofitableproduct

P2Profitableproduct

P3Losingproduct

P4Mixed-bag

product

Products

++

+Highprofit

customer

+

-Mixed-bagcustomer

+

--

Losingcustomer

C1 C2 C3

Customers

Consumer Behaviour

An Introduction

What is Consumer Behaviour?

Those activities directly involved in obtaining , consuming and

disposing of products and services, including the decision

processes that precede and follow these actions

Consumer Characteristics… Take-Away

• CB is influenced by consumer characteristics– Individual chars (Personality, Lifestyle)– Environment (Reference Groups, Culture)

• Important to take these variables into account in your marketing plan – introvert/extrovert:

• Also important to keep track of trends…– E.g., lifestyle trends (McDonald’s)

• Culture: Important because of global marketing– Localization vs. Standardization??– Flexible Globalization is often the solution (McDonald’s)

Perspectives of CB

Logical Positivism1. Understanding and predicting consumer

behaviour 2. Cause and effect relationships that

govern persuasion and/or educationPost Modern – to understand consumption

behaviour without any attempt to influence it

7 O FRAMEWORK eg purchase of soap

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Firm’s Marketing Efforts1. Product2. Promotion3. Price4. Channels of distribution

Sociocultural Environment1. Family2. Informal sources3. Other noncommercial

sources4. Social class5. Subculture and culture

Output

Process

Input

Ext

ern

al I

nfl

uen

ceC

onsu

mer

Dec

isio

n M

akin

gP

ost -

Dec

i sio

n

Beh

avi o

r

Post purchase Evaluation

Purchase1. Trial2. Repeat purchase

Need Recognition

Prepurchase Search

Evaluation of Alternatives

Psychological Field1. Motivation2. Perception3. Learning4. Personality5. Attitudes

Experience

A Model of Consumer Decision Making

Decision Issues

• Types of decisions– Routinized response (e.g., gas, sodas)– Limited problem solving (e.g., car service, fast food)– Extended problem solving (e.g., new car, computer, medical

procedures)

• Type of evaluation:– Compensatory: Decision based on overall value of alternatives

(good attribute can outweigh bad ones)– Non-compensatory: Absolutely must meet at least one

important criterion (e.g., car must have automatic transmission)

Potential Family Life Cycle Stages

YOUNGSINGLE

BLENDED

SINGLE PARENT

FULL NEST I/II/III

EMPTY NESTI/II

OLDERSINGLE

YOUNGCOUPLE

Household Decision Making

• Roles/influence– Information

gatherers/holders– Influencers– Decision makers– Purchasers– Users

Adoption Process

1. Awareness

2. Interest

3. Evaluation

4. Trial

5. Decision

6. Confirmation

Organizational Buyers

• Types– Industrial– Reseller– Government and non-profit organizations

• Characteristics– Greater involvement– Bureaucracy– Long term relationships

Organizational decision making v/s Consumer decision making

• Purchase decisions made by companies frequently involve many people

• Organizational and industrial products are often bought according to precise, technical specifications that require a lot of knowledge about the product category.

• Impulse buying is rare because buyers are professionals, their decisions are based on past experience and a careful weighing of alternatives.

• Decisions often are risky, especially in the sense that a buyer´s career may be riding on his demonstration of good judgment.

• The business-to-business marketing often involves more of an emphasis on personal selling than on advertising or other forms of promotion.

MODELS OF ORGANIZATIONAL BUYING BEHAVIOR

To gain a simplified view to organizational buying behaviour for a practical use, there are several models to handle the complex environment. The following introduces four major groups first conceptualized by Rowland T. Moriarty :

• Task oriented model

• Non task oriented model

• Decision process model

• Complex model

three types of buying decisions:

• Straight rebuy- Purchasing department reorders on a regular basis. The buyer chooses from suppliers on an approved list. The suppliers make an effort to maintain product and service quality and propose “automatic reordering systems”. The “out-suppliers” attempt to offer something new or exploit dissatisfaction with existing supplier.

• Modified rebuy- The buyer wants to modify product specifications, prices, delivery requirements and other terms. This involves additional decision participants on both sides. The “in-suppliers” become nervous and “out-suppliers” try to offer a better deal.

• New task- The purchaser buys a product or service for the first time.

MARKET SEGMENTATION

• CONCEPT AND DEFINITION

The concept of market segment is based on the fact that the market of commodities are not homogeneous but they are heterogeneous. Market represent a group of customer having common characteristics but two customer are never common in their nature, habits, hobbies income and purchasing techniques.

• According to Philip kotler , “ Market segmentation is sub-dividing a market into distinct and homogeneous subgroups of customers, where any group can conceivably be selected as a target market to be met with distinct marketing mix.”

• Market Segmentation is a method of “dividing a market (Large) into smaller groupings of consumers or organisations in which each segment has a common characteristic such as needs or behaviour.”

DEFINITIONS

• MARKET SEGMENTATION: Customer oriented -- identifies customer subgroups of the market as they currently exist.

• PRODUCT DIFFERENTIATION: Product oriented -- identifies subgroups of competing products.

RULE OF MARKET SEGMENTATION

• Maximize homogeneity within market segments

• Maximize heterogeneity between market segments

Why you need customer segments

• Customers are usually very different• College students, senior citizens, families

with children, empty nesters…• The same message to all may not work so

well.• Solution: create segments, and design a

program for each segment.

A valid segment strategy involves:

• Communications to the segment (direct mail, email, on-location personal attention)

• Rewards designed to modify behavior• Controls to measure the success of the strategy• A budget for implementation of the strategy• Specific goals and metrics for engagement: for

behavior modification• An organization that accepts responsibility for

the segment

LEVELS OF MARKET SEGMENTATION

SEGMENT MARKETING

NICHES MARKETING

LOCAL MARKETING

INDIVIDUALS MARKETING

1. SEGMENT MARKETING Consists of a group of customers who share a similar set of needs and wants.

Identifiable Group with in a Market with Similar

• Wants• Purchasing Power• Geographical Location• Buying Attitudes

FLEXIBLE MARKET OFFERING

• Even in segments 100 % needs are not same – consists of two parts

1.Naked Solution :- products and services that all members of the segment values.

2.Discretionary options :- that some segment members value. Each option might carry an additional charge.

Example: Automobile industry – basic model is same but for A.C , power steering, power window buyer

has to pay extra price. Delta Airlines offers all economy

passengers a seat and soft drinks. It charges economy passengers extra for alcoholic beverages.

Market Segments can be defined in many different ways. One way to carve up a market is to identify Preference segments

Suppose ice cream buyers are asked how much they value sweetness and creaminess as two product attributes. Three different patterns can emerge.

Homogeneous preference : – where all the consumer have roughly the same preferences.– We would predict that existing brand would be similar and

cluster around the middle of the scale in both sweetness and creaminess.

Diffused preference :– consumers vary greatly in their preferences

Clustered preference :

creaminess

sweetness

Homogeneous Preference -no natural segments -all buyers have same preference

creaminess

sweetness

Diffused Preference -no pattern (…or poor research) -take center position

creaminess

sweetness

Clustered Preference -natural segments -increases as number of competitors increases

2. NICHE MARKETING Group of customers seeking a distinctive mix of benefits who are

ready to pay extra premium. Niche = segment sub – segments

Eg. Washing detergents hard & gentle washes . Surf excel for tough stains ( hard on clothes) & Ezee from Godrej for delicate clothes.

--- Astha , Sanskar , Q TV – focus on religion & spiritualism. DISTINCT NEEDS PAY PREMIUM SPECIALIZATION LESS COMPETITION POTENTIAL

3. LOCAL MARKETING

• Marketing programs tailored to the needs & wants of local customer groups in trading areas, neighborhoods , etc.

• this trend is called grass roots marketing.

Ex. – Spiderman 3 was released in 5 different language in India including bhojpuri.

ChitlePune sarees

Kashmiri silk

4. INDIVIDUAL MARKETING

• Ultimate segmentation – segments of 1 or customized marketing or one to one marketing.

• Customerization – empower the consumers to design the product or service offering of their choice.

• Ex. Paint companies have started doing this- Asian Paint , Nerolac , Berger Paints

• Arvind mills launched Ruff’n Tuff Jeans, branded ready – to – stitch

GEOGRAPHIC SEGMENTATION

Divide the market into different group based on :• Region – South India , North , Western Region, East• City – metro cities, cities with population more than 1 million• World• Density• Climate• States

Ex.- Mcdonalds globally, sell burgers aimed at local markets, for example, burgers are made from lamb in India rather then beef because of religious issues. In Mexico more chilli sauce is added and so on.

DEMOGRAPHIC SEGMENTATION

Segment Strategy

An ideal segment…• Has definable characteristics in terms of behavior

and demographics: for example, Retired Couples• Is large enough in terms of potential sales to justify

a custom marketing strategy with appropriate rewards and budget

• Has members who can be motivated by cost effective rewards to modify their behavior in ways that are profitable for your company

• Makes efficient use of available data to support segment definition and marketing efforts

• Can be measured in performance, with control groups

• Justifies an organization devoted to it: can be a single person, or part of a person’s time, but there should be someone who “owns” each segment.

Segment action plan:

• A roadmap showing what will happen when. “Send each policyholder a birthday card and a policy review 45 days before their policy renewal date.”

• A budget for the infrastructure and for the segment marketing plans

• An organization chart that shows who is responsible for each segment

• Specific goals to be achieved with milestones for measurement of success

BASES FOR SEGMENTINGMARKETS

CONSUMER:• Geographic• Demographic (age, income,

marital, occupation, ethnicity, etc.

• Psychographic (AIO, lifestyles)

• Behavioral (occasions, user status, usage rate, loyalty status, hierarchy of needs)

• Benefits

BUSINESS TO BUSINESS:• Demographic (industry,

size, location)• Customer Variables

(technology, user/nonuser, loyalty status)

• Purchasing(centralized/decentralized, functional orientation, contracts vs. bids vs. lease)

• Situational (urgency, order size, product application)

PSYCHOGRAPHIC SEGMENTATION

BEHAVIOURAL SEGMENTATION

OCCASIONS - Archies and Hallmark cards, Monaco at tea time.

BENEFITS – Shampoo for hair conditioning, cleaning , hair fall defence dandruff control

USER STATUS- light – medium – heavy user

LOYALTY STATUS- hardcore loyal , split loyal- loyal to 2-3 brand ,shifting loyal, switcher

PSYCHOGRAPHIC SEGMENTATION

• Actualizers (taste, finer things)• Fulfilleds (functionability, value, durability)• Believers (established products/brands)• Achievers (visibility to peers)• Strivers (emulation)• Experiencers (experiential consumption)• Makers (basic practical possessions)• Strugglers (urgent basic needs)