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MARKETING MANAGEMENT
Dr. MUKESH MISHRA
MARKETING MANAGEMENT: DEFINITIONS

1.
Marketing is the creation and delivery of a standard of living. 2. Marketing is a managerial and societal process by which individuals and groups obtain what they need and want through creating, offering, and exchanging products and services of value with others.

3.Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.

Marketing management is the art and science of choosing target markets and getting, keeping, and growing customers through creating, delivering, and communicating superior customer value.
WHAT IS MARKETED?
Marketers are involved with marketing ten types of entities:
1. Physical Goods 2. Services
3. Experiences 4. Events
5. Persons 6. Places 7. Properties 8. Organizations 9. Information 10. Ideas
Good Marketing is No Accident

The roaring success of four-wheeler Tata Ace, in a market earlier dominated by threewheeler load carriers, was due to a deep understanding of the market needs and customer requirements Big on technology. Small in size
Tata Ace, a mini truck with the engine capacity of less than one ton launched by Tata motors in 2005. The resounding success of Tata ace was due to deep understanding of the market needs and the customer requirement. The company realized that, as the Indian economy was growing, there would be for smaller vehicles that can navigate through the narrow roads and by lanes of city, small towns and village
In order to compete effectively with three wheeler majors who dominated the market of small payload vehicles, the company needed to offer better solution to the customer. The solution lay down in the market, and that is where the engineers went- to talk the transporters, the small traders and the farmers- to learn what they wanted. Discussion with potential customer and detailed marker research indicated that potential customer needed vehicles for last mile distribution for carrying less than one ton load over short distances.
Customer were willing to pay a marginally high price for such product. But what come out more strongly was the social status associated with four wheeler. Based on customer insight, the company decided to introduce a vehicle positioned as a Tata truck in mini size with competitive price tag while maintaining higher quality standards. Within 22 month of launch of vehicle, the company rolled out the 1,00,000th ace , surpassing the company optimistic target
Who Markets?
Marketers and prospects A marketer is someone who seeks a response-attention, a purchase from other parties called prospect. If two parties are seeking to sell something to each other, we call them both marketers
Who Markets?
Market It is collection of buyers and sellers who transact over a particular product or product class
A Simple Marketing System
1-
Types of Demand
1.
2. 3.
4.
Negative demand- customer dislike the product and may even pay price to avoid it. Non existence demand- consumers may be unaware of or uninterested in the product. Latent demand- consumer may share a strong need that cannot be satisfied by existing product. Declining demand- consumer begin to buy the product less frequently or not at all.
Types of Demand
5. Irregular demand- Consumer purchases vary on a seasonal, monthly, weekly, daily, or even hourly basis. 6.Full demand- consumers are adequately buying all the products put into market place. 7. Overfull demand- More consumer would like to buy the product that can be satisfied. 8.Unwholesome Demand- Consumers may be attracted to products that have undesirable social consequences.
Structure of Flows in a Modern Exchange Economy
Key Customer Markets

Consumer Markets Global Markets
Business Markets
Nonprofit/ Government Markets
www.marutitruevalue.com
Functions of CMOs
Strengthening the brands Measuring marketing effectiveness Driving new product development based on customer needs Gathering meaningful customer insights Utilizing new marketing technology
Improving CMO Success
Make the mission and responsibilities clear Fit the role to the marketing culture and structure Ensure the CMO is compatible with the CEO Remember that show people dont succeed Match the personality with the CMO type Make line managers marketing heroes Infiltrate the line organization Require right-brain and left-brain skills
Core Marketing concepts

Needs, Wants and Demand Needs are basic human requirement Wants are needs directed to a product Demand is a want accompanied by buyers ability to pay. Today the challenge for the marketer is that of converting needs to wants to demands
Marketers don't create needs: Needs preexist markets. Marketers along with other societal factors, influence wants. Five type of needs 1.Stated need(the customer wants an inexpensive car) 2.Real needs(the customer wants a car whose operating cost is low) 3.Unstated needs(the customer expects good service from dealer) 4.Delight needs 5.Secret need (the customer wants friends to see him as a savvy consumer)

Target Markets, Positioning and Segmentation A marketers can rarely satisfy everyone in the markets. Marketers start by dividing the market into segments. They identify and profile distinct groups of buyers who might prefer or require varying product mix by examining demographic, psychographic, and behavioral differences among buyer

After
identifying market segments, the marketer then decides which present the great opportunity-which are its target market. For each, the firm develops a market offerings ie positions in the minds of the target buyers as delivering some central benefits E.g. Scorpio (SUV) launched by M&M is designed for people who prefer sturdy vehicle that offers luxury and comfort
Positioning
Press ads of the Scorpio focused on the functional features of the vehicle and the television ads focused on emotional benefits.

Offerings and Brands Company address needs by putting forth a value proposition(functional, emotional and self expressive benefits) A brand is an offering from a known source. the brand name carries many associations in peoples mind that make up the brand image

Value and Satisfaction The offering will be successful if it delivers value and satisfaction to the target buyer. The buyer choose between different offerings based on she perceive to deliver the most value Value reflects the sum of the perceived tangible and intangible benefits and costs to the customer

Value
is a composition of quality service and price (QSP) called the customer value triad Value increases with quality and service and decreases with price although other factors can also play an important role in our perception of value Marketing can be considered as identification , creation , communication delivery and monitoring of customer value.

Satisfaction
reflects person judgments of a product perceived performance in relationship with expectations. If performance falls short of expectation he customer is dissatisfied and disappointed. If it matches expectations, the customer is satisfied, if it exceeds them, the customer is delighted.

Marketing channels To reach a target market, the marketers uses 3 kinds of marketing channels Communication channels deliver and receive message from target buyers and include newspaper, magazines, radio, tv, billboard and internet. Distribution channels is used to display, sell, or deliver the physical product or services to the buyer or user.
It include distributors,wholesalers,retailers and agents. Service channels is used to carry out transactions with potential buyers. It include warehouses, transportation companies, banks, and insurance companies that facilitate transactions.
Marketer face a design challenge in choosing the best mix of communication, distribution, and service channels for their offering.

Supply Chain The supply chain is a longer channel stretching from raw materials to components to final products that are carried to final buyers Each company captures only a certain percentage of the total value generated by supply chains value delivery system.
When a company acquires competitors or expands upstream or downstream, it aim to capture a higher percentage of supply chain value.

Competition Competition includes all the actual and potential rival and substitute a buyer might consider Marketing Environment It consists of the task environment and broad environment The task environment includes the actor engaged in producing, distributing, and promoting the offering
These are company suppliers, distributor dealers, and the target customers. In the supplier group are material suppliers and service suppliers, such as marketing research agencies, ad agencies, banking and insurance companies and transportation companies. The broad environment consists of six components: demographic environment, political-legal environment and socio cultural ,technical, natural and economic
The marketplace isnt what it used to be

Information technology Globalization Deregulation Privatization Competition Convergence Consumer resistance Retail transformation
New Consumer Capabilities
A substantial increase in buying power A greater variety of available goods and services A great amount of information about practically anything Greater ease in interacting and placing and receiving orders An ability to compare notes on products and services An amplified voice to influence public opinion
Company Orientation toward the marketplace

The Production Concept It holds that consumers will prefer product that are widely available and inexpensive. Manager of production oriented business concentrate on achieving high production efficiency, low costs and mass distribution This orientation make sense in developing country

The Product Concept It proposes that consumers favor products that offer the most quality, performance, or innovative features. Manager in these organization focus on making superior product and improving them over time. But a new or improved product will not necessarily be successful unless its priced, distributed, and sold properly.

The selling concept This concept holds that a organization must undertake an aggressive selling and promotion effort. The selling concept is practiced most aggressively with unsought goods, goods that buyer normally dont think of buying. Most firm also practice the selling concept when they have over capacity. Their aim is to sell what they make, rather than what the market wants.

The Marketing Concept The marketing concept holds that the key to achieving organizational goals is being more effective than competitors in creating, delivering, and communicating superior customer value to your chosen target market.
Holistic Marketing Dimensions

The
holistic marketing concept is based on development, design ,and implementation of marketing programs, processes, and activities that recognizes their breadth and interdependencies. It is an approach that attempts to recognize and reconcile the scope and complexities of marketing activities

Relationship Marketing A key goal of marketing is to develop deep, enduring relationships with people and organization that directly or indirectly affect the success of the firm`s marketing activities. Relationship Marketing aims to build mutually satisfying long-term relationship with key constituent in order to earn and retain business
Four key constituents for relationship marketing are customer, employees, marketing partner (channels, suppliers, distributor, agencies) and member of financial community (shareholders, investors, analysts) To develop strong relationship with them requires understanding their capabilities and resources, needs, goals, and desires
The ultimate outcome of relationship marketing is a unique company assets called a marketing networks. A marketing networks consists of the company and its supporting stakeholders-with whom it has build mutually profitable business relationships The operation principle is simple:build an effective network of relationships with key stakeholders, and profits will follow. Attracting a new customer may cost five time as much as doing a good enough job to retain an existing one.

Integrated Marketing The marketers task is to devise marketing activities and assemble fully integrated marketing programs to create, communicate, and deliver value for customer.
marketers should design and implement any one marketing activity with all other activities in mind McCarthy classified these activities as marketing-mix tools of four broad kinds, which he called 4ps of marketing: product, price, place, and promotion.
The Marketing Mix
The firm can change its price, sales force size, and ad expenditures in the short run.it can develop new product and modify its distribution channels only in long run. The four ps represents the sellers view of marketing tools available for influencing buyers From buyers point of view, each marketing tool is designed to deliver a customer benefits. A complimentary breakdown of marketing activities has been proposed that centers of customer four dimensions are (SIVA) solution, Information, Value and access
The New Four Ps

People
Processes Programs Performance
The New Four Ps

1.People It reflects , in part, internal marketing and the fact that employees are critical to marketing success. It also reflect the fact that marketers must view consumers as people to understand their life more broadly, and not just as they shop for and consume products and services.
The New Four Ps

2. Processes It reflects all the creativity, discipline, and structure brought to marketing management. Only by instituting the right set of processes to guide activities and program can a firm engage in mutually beneficial ling term relationship.
The New Four Ps

3.Programs It reflect to firm consumer-directed activities It encompasses the old four Ps as well as range of other marketing activities that might not fit as nearly into old view of marketing These activity must be integrated such that their whole is greater than the sum of their parts and they accomplish multiple objectives for frim.
The New Four Ps

4. Performance To capture range of possible outcome measures that have financial and non financial implications(profitability as well as brand and customer equity) and implications beyond the company itself(social responsibility, legal, ethical and community related)

Internal Marketing It ensure that everyone in organization embraces appropriate marketing principles, especially senior management. It is the task of hiring , training, and motivating able employees who want to serve customer well. Smart marketers recognize that marketing activities within the company can be more important than marketing activites directed outside the comapany It make no sense to promise excellent service befor the companies staff is ready to provide it.

Performance Marketing It is understanding the returns to the business from marketing activities and programs as well as addressing broader concerns and their legal, ethical, social, and environmental effects Top management is going beyond sales revenue to examine the marketing score card and intreprete what is happening to market share, customer loss rate, customer satisfaction, product quality, and other measures

Financial Accountability Marketers are being increasingly asked to justify their investments to sinior management in financial and profitability terms, as well in terms of building brand and growing customer base. They are applying broader variety of financial measures to assess the direct and indirect value their marketing efforts create.

Social Responsibility Marketing The effect of marketing clearly extend beyond the company and the customer to society as a whole. Marketers must carefully consider their role in broader terms, and the ethical, environmental, legal, and social context of their activities The societal marketing concept holds that the organizations task is to determine the needs , wants, and interest of the target market and to deliver the desired satisfaction more efficiently and effectively than competitors in away to preserve or enhances the consumers and society long term well being.
Marketing Management Tasks
Develop market strategies and plans Assess market opportunities and customer value Choose value Design value Deliver value Communicate value Sustain growth and value
Marketing Environment
Objectives
Understanding
the behavior of key environmental forces that have an implications on marketing decisions. Grasp the technique available for environmental scanning. Some important macro economic development.
Introduction
It is very important for the marketer to monitor the environmental forces and take necessary steps to negate/take advantage of them before competition In India many industries lost their competitive advantage to relatively new entrant in 1980 and thereafter HM and premier automobiles lost their pre eminent position in the Indian market to Maruti 800
Introduction
Titan watches herald a new era of watches and shock the giant HMT. Today south Korean brand LG and Samsung are the principal players leaving behind the Indian Companies like Videocon. Analysis of the external environment consists of identification of opportunities and threats and tracking it to particular sources. E.g. A small family with a one child means the emergence of a child market where all parental attention is focused on this child
Needs and Trends

1.Fad A fad is unpredictable, short-lived, and without social, economic and political significance. A company can cash in on a fad, but getting it right is more a matter of luck and good timing than anything else.
Needs and Trends

2.Trend A trend is a direction or sequence of events that has some momentum and durability Trends are more predictable and durable than fads. A trend reveals the shape of future and provide many opportunities. E.g. physical fitness.
Needs and Trends

3.Megatrends It is a large social, economic, political, and technological changes that are slow to form, and once in place, they influence us for some time 5-10 years. E.g. young employees companies and their suppliers, marketing intermediaries, customers, competitors, and public all operate in a macro environment of forces and trends, increasingly global that shape opportunities and poses threats
Environmental Forces
Demographic
Political-Legal Economic
Technological Natural
Socio-Cultural
Demographic Environment
The main demographic force that marketers monitor is population, because people make up the markets. Marketers are keenly interested in the size and growth rate of population in cities, region, and nations; age distribution and ethnic mix; educational level; household patterns; and regional characteristics and movements
a)Age composition a marketer needs to understand the age composition in a country. This will help them to decide their optimal marketing mix and also take strategic decisions regarding entering a particular market segment. E.g. about 72% of Indian market is a young market consisting of people in the age group of 5-44 years
b) Sex structure of population and role of women Besides the age , it is necessary to break up population according to sex and study the role of women in Indian society. E.g. more and more women have taken to working and to professional careers and hence one observes an increase in the no. of working couples To help her and the family, many time-saving appliances like cooking range , washing machine, vacuum cleaner, as well ready to eat foods are available in the market.
c) Role of Man Today man is perceived as more caring, concerned and sensitive. He is continuously searching for new avenues of growth for himself and other family member His relation with his family, peer group, and opposite sex, has changed. He perceives entertainment as very important for the family, so long as it does not lead to extravaganza.
d)The new urban child This child is more responsible, disciplined, careerminded, and conscious for family values. He or she has a role in the purchase and consumption of all products and services. A highly ambitious, confident, and aware child, dreams for becoming rich and famous like D Ambani, s tendulakar or Bill gates, therefore role models are parents, the rich, and celebrities. Fashion plays an important part. But for him, adopting fashion product is dependent on the peer groups influence.
e) Occupation and Literacy profile A major determinants of market structure in counties like india is the literacy rate of the population, this is so because it affects the demand for information and also the quality of demand for other products and services. As in 2001, about 65.4% of Indian were literate.75%of Indian males were literate as opposed to 54% of women. the Indian market has been on ascent so far as literacy is concerned. The occupational profile of the population also affects the media choice and product demand, E.g. a shirt or suiting exclusively for the professional executive sells best when advertised in business magazines
Economic Environment
The available purchasing power in an economy depends on current income, prices, savings, debt and credit availability Marketer must pay attention to ternds affecting purchasing power because they can have strong impact on business, especially for companies whose product are geared to highincome and price sensitive consumers
Wage inflation annual wage increases in a particular sector will depend on the supply of labour in that sector. Where there is scarcity of supply, wages usually increase (e.g. doctors). Price inflation how much consumers pay for goods and services is dependent on the rate of supply of those goods and services. Gross domestic product per capita combined output of goods and services in a particular nation determines relative wealth between countries when comparisons are calculated per member of the population.
Income, sales and corporation taxes typically operating in all countries around the world usually at different levels, substantially affecting how we market goods and services. Exchange rates the relative value of a currency vis--vis another currency impacts on businesses operating in foreign markets or holding financial reserves in other currencies.
Export quota controls and duties there are often restrictions placed on the amounts (quotas) of goods (and services) that any particular firm or industry can import into a country, depending on to which trading bloc or country a company or firm is exporting.
The economic environment affects the demand structure of any industry or product. in order to assess the impact of these forces. It is necessary that a marketer examines the following factors in great detail. Gross National Product Per capita income Balance of Payments Position Trends the prices of goods and services
Income Distribution A marketer needs to understand the distribution of income to reach more meaningful conclusions about taking specific decisions. 77.7% of urban households in India have a monthly income of up to Rs 3000.Urban households with a monthly income between Rs3001 and 6000 are estimated to about 16.2% and another 4% with a monthly household income of Rs 60001- 10,000. Only about 2.15 of urban household have monthly income of over Rs 10000.
The NCAER has classified Indian consumers into 5 categories according to annual house hold income Destitute :Below Rs 16,000(Not active Participant in market exchange for a wide range of goods) Aspirants: Between Rs 16001 and 22,000(New entrant in consumption system due to increase in their real income) Climbers :Between Rs 22001 and 45000(Have desire and willingness to buy, but have limited cash at hand) Consuming Class: Between Rs 45000 and 215000 (household that form the majority of consumers; have money and willing to spend) Very rich : Over Rs.2,15,000(those who have money and own a wide range of products)
The no. of households classified as the rich is estimated to grow by 95% from the year 95-96 to 2006-2007, the consuming class by 132%, and the climber class by 51%. The percentage of aspirants is expected to decline by 54% and the destitute by about 50% The rich class in urban areas is estimated to increase by 400%, where as rural India indicate a growth of 200% The climber are estimated to grow by 145% in urban areas and by 119% in rural areas. It is expected that the urban areas are likely to register a sharper reduction in households belonging to the aspirants and destitute category than the rural areas.
Cultural Environment
Cultural forces are the most difficult uncontrollable variable to predict. It is important for marketer to understand and appreciate the cultural values of the environment in which they operate. The element that build up the cultural environment are Language, aesthetic(art, drama, music, folk), Religion and education. Changes in cultural environment affect consumer behavior, which affects sales of products. Culture has a large impact on the consumption habit of people. since culture is homogeneous within a group. so there is similarities in choice which need to be paid attention by marketing manager E.g. Mc D, KFC, Kelloggs
Natural Environment
The
deterioration of the natural environment is a major global problem. There is a great concern about Green House Gases in the atmosphere due to burning of fossil fuels. About the depletion of the ozone layer due to certain chemical and global warming and about the growing water shortage.
Natural Environment
The campaign against Coca-cola by the local community in Kerla, alleging the environmental deterioration and shortage of drinking water in the vicinity of the plant, is an example of the increasing environmental consciousness. Steel companies and public utilities have had to invest billions of dollars in pollution-control equipment and more environmentally friendly fuels. The soap industries increased its product biodegradability.
Technological Environment
Every new technology is a force for `creative destruction` transistor hurt vacuum tube industry, Xerography hurt the carbon paper business. Marketer should monitor the following four trends in technology: A) accelerating pace of change Many of today's common products were not available 40 years ago. Electronic researchers are building smarter chip to make our cars, homes and office connected and more responsive to changing conditions
Technological Environment
b) Some of the most exciting work today is taking place in biotechnology, computers, microelectronics, telecommunication and designer materials c)Varying R&D Budgets Increasing opportunities emerging as a result of globalization are forcing many companies in South Asia to increase their R&D efforts. d)Increased regulation of technological change Gov. has expanded its agencies power to investigate and ban potentially unsafe product
Political-Legal Environment
It
consists of laws, government agencies, and pressure group that influence and limit various organization and individuals. These laws sometimes also create new opportunities for business.e.g. Recycling Major trend in political legal environment are
a)

Increase in business legislation Its main purpose are to protect companies from To protect consumers from unfair business practices To protect the interests of society for unbridled business
b)Growth of special interest group in order to protect interest of consumer Gov. passed legislation consumer protection act 1986. under this act following 6 rights of consumer were recognized safety Information Choice Representation Redressal Consumer education
The Political Environment: BusinessGovernment Relations

Several ways marketers conduct business government relations in various countries include:
Lobbyist
firms, with key industry knowledge, are engaged either permanently or as needed. Using public relations consultancies, e.g. Public Relations Consultants Association of India, can be commissioned for their political services. A politician can be paid a fee to give political advice on matters of importance to an organization, where this is legal within that particular jurisdiction, and that politician is not serving directly within the government in question on the same portfolio as that on which they are advising.
The Political Environment: BusinessGovernment Relations
An in-house public relations manager might

handle government relations directly. An industry association can be contacted to lobby on behalf of members (e.g. the International Marine Contractors Association (IMCA) is the international trade association representing offshore, marine, and underwater engineering companies). A politician may be invited directly to join the board of directors, board of trustees, or board of advisers of an organization.
Environmental Scanning
According to Aguilar (1967), environmental scanning is the process of gathering information about a companys external events and relationships, in order to assist top management in its decision-making, and so develop its future course of action.
It can be regarded as the internal communication of external information about issues that may potentially influence an organisations decisionmaking process, focusing on the identification of emerging issues, situations and potential threats in the external environment (Albright, 2004).
Information Requirements for Environmental Scanning
Customer and competitor information including competitors prices, competitors new product introductions, competitors advertising/promotional programmes, competitors entry into new markets and new product technologies, customers buying habits, customers product preferences, customers demands and desires.
Company resources and capabilities including companys R & D capabilities and resources, companys advertising and promotions resources, companys sales capabilities/resources, companys financial capabilities/resources, companys management capabilities/resources.
Suppliers of labour and funds including availability of external financing, availability of labour and new manufacturing technologies (Beal, 2000
Environmental Scanning Process
Understanding Task/Performance Environment
The performance environment consists of those organizations that either directly or indirectly influence an organizations operational performance. There are three main types: 1.Those companies that compete against the organization in the pursuit of its objectives. 2.Those companies that supply raw materials, goods, and services and those that add value as distributors, dealers, and retailers, further down the marketing channel. 3.Those companies that have the potential to indirectly influence the performance of the organization in the pursuit of its objectives. These organizations often supply services such as consultancy, financial services, or marketing research or communication agencies.
Industry Analysis: Porters Five Forces
1. Threat that new competitors will enter the market 2. Threat posed by substitute products 3. Bargaining power of buyers 4. Bargaining power of suppliers 5. Intensity of rivalry between the current competitors
Industry Analysis: Porters Five Forces
Demand Forecasting
Importance
One major reason for undertaking marketing research to identify market opportunities. Once the research is complete, the company must measure and forecast the size, growth and profit potential of each market opportunity. Sales forecasts are used by finance to raise the needed cash for investment ond operations.
How can we measure market demand?

Potential market
Available market Target market Penetrated market
Forecasting and Demand Measurement
The Measure of Market Demand
Companies can prepare as many as 90 different type of demand estimates for six different product levels, five space leveles,and three time period. Potential Market It is the set of consumers who profess a sufficient level of interest in a market offer,however consumer interest is not enough to define a market for marketers unless they also have sufficient income and access to the product.
The Measure of Market Demand

Available Market It is a set of consumers who have interest, income, and access to a particular offer Target market It is the part of qualified available market the company decides to pursue. The company might decide to concentrate its marketing and distribution effort on south Asian market. Penetrated Market It is a set of consumers who are buying the company`s product.
A Vocabulary for Demand Measurement

Market Demand
Market Forecast Market Potential Company Demand Company Sales Forecast Company Sales Potential
The concept of Demand

Market Demand Market demand for a product is the total volume that would be bought by a defined customer group in a defined geographical area in a defined time period in a defined marketing environment under a defined marketing program Market demand is not a fixed number, but rather a function of stated condition. For this reason it is known as market demand function
Market Demand Functions

The
distance between the market minimum and the market potential shows the overall market sensitivity of demand. Market Forecast Only one level of industry marketing expenditure will actually occur. The market demand corresponding to this level is called market forecast

Market potential Market potential is the limit approached by market demand as industry marketing expenditures approaches for given marketing environment. Product penetration percentage It is the percentage of ownership or use of a product or service in population. Company assume that lower the product penetration percentage, the higher the market potential

Company Demand Its company`s estimated share of market demand at alternative levels of company marketing effort in a given time period It depends on how the company`s products, price and communications are perceived relative to competitors

Company Sales Forecast Once the company have estimated company demand, their next task is to choose a level of marketing effort. Company sales forecast is the expected level of company sales based on a chosen marketing plan and an assumed marketing environment.

Sales Quota(Target) is the sales goal set for a product line, company division, or Sales person. Its a managerial device for defining stimulating sales effort, often set slightly higher than estimated sale to stretch the sales force effort.

Sales budget It is a conservative estimate of the expected volume of sales, primarily for making current purchasing, production, and cash flow decisions. Its based on the need to avoid excessive risk and is generally set slightly lower than sales forecast
Estimating Current Demand

Total Market Potential Its the maximum sales available to all firms in an industry during a given period, under a given level of industry marketing efforts and environmental conditions Total market potential= (potential number of buyers) X (average quantity purchased by a buyer )X (the price)

Chain Ratio Methos

Area Market potential Because company must allocate their marketing budget optimally among their best territories, they need to estimate the market potential of different cities, states, and nation Two methods are the market-buildup method, used primarily by business marketers, and multiple factor index method, used primarily for consumer marketers

Market buildup method Calls for identifying all the potential buyers in each market and estimating their potential purchases. It produces accurate results if we have a list of all potential buyers and a good estimate of what each will buy. Its mostly applicable in B2B market.
a)

b)Multiple factor Index method As the customer of consumer companies are too numerous, its difficult to list them. So, consumer companies estimate market potential either by using exiting market indexes or by developing their own market indexes.

The
RK SWAMY BBDO Guide to urban markets uses about 18 variables with proper weightages to develop market indexes for about 784 towns with population over 50,000 spread over 21 states and 3 union territories of India, accounting for about 77% of urban population.
MICA Rural Market Ratings use six variables with proper weightages to develop index(rating) for 459 districts based on 1991 census. Company can develop their own indexes for markets bases on some assumptions e.g. Pharma company may assume that potential for drugs in a particular geographical market will be a function of (1) population of the area,(2) per capita income, and (3) the number of physicians in the market.
so , drug buying index in Delhi =(a X population of Delhi as a percentage of national population)+(b X per capita income of Delhi as a percentage of national per capita income)+(c X Number of physician in Delhi as a percentage of number of physician in India). a, b and c are determined using past sales and other data

Many
companies compute other area indexes as a guide to allocating marketing resources Company use Brand development index, which is the ratio of brand sales to category sales expressed in percentage term.
Estimating Current Demand: Area Market Potential

Multiple-Factor Index
estimating future market demand
Company in India normally use some variant of the time series method for estimating future demand. However some large company use sophisticated econometric models for forecasting. This involve a three stage process of preparing macroeconomic forecast first, followed by industry forecast, and than a company sales forecast. Large companies either employ business economists or outsource the work to business consulting or marker research firms.
Forecasting process
Develop forecasting procedure Determine independent and dependent variables Forecast objectives
Select forecasting analysis method Comprehend total forecasting procedure Collect, collate, gather and analyze data
Evaluate performance results against the forecasts
Present all the assumptions about data
Make and finalize the forecast
Forecasting Approaches
Two basic approaches:

Top-down or Break-down approach
Bottom-up or Build-up approach
Some companies use both approaches to increase

their confidence in the forecast
Steps followed in Top-down / Breakdown Approach
Forecast relevant external environmental factors Estimate industry sales or market potential Calculate company sales potential = market potential x company share Decide company sales forecast (lower than company sales potential because sales potential is maximum estimated sales, without any constraints)
Steps followed in Bottom-up / Build-up Approach
Salespersons estimate sales expected from their customers Area / Branch managers combine sales forecasts received from salespersons Regional / Zonal managers combine sales forecasts received from area / branch managers Sales / marketing head combines sales forecasts received from regional / zonal managers into company sales forecast, which is presented to CEO for discussion and approval
Popular methods in forecasting

Qualitative methods
Sales force composite Delphi technique
History analogy
Expert opinion
Survey of buyers expectation
Quantitative methods
Test marketing
Nave method
Trend method
Moving average
Regression method
Exponential smoothening
Executive opinion method

Most widely used Procedure includes discussions and / or average of all executives individual opinion Advantages: quick forecast, less expensive Disadvantages: subjective, no breakdown into subunits Accuracy: fair; time required: short to medium (1 4 weeks) Process includes a coordinator getting forecasts separately from experts, summarizing the forecasts, giving the summary report to experts, who are asked to make another prediction; the process is repeated till some consensus is reached Experts are company managers, consultants, intermediaries, and trade associations
Delphi method
Delphi Method (Continued)

Advantages: objective, good accuracy Disadvantages: getting experts, no breakdown into subunits, time required: medium (3/4 weeks) to long (2/3 months)
Sales force composite method
An example of bottom-up or grass-roots approach Procedure consists of each salesperson estimating sales. Company sales forecast is made up of all salespersons sales estimates Advantages: Salespeople are involved, breakdown into subunits possible Disadvantages: Optimistic or pessimistic forecasts, medium to long time required Accuracy: fair to good (if trained)
Survey of Buyers Intentions Method Process includes asking customers about their intentions to buy the companys products and services Questionnaire may contain other relevant questions Advantages: gives more market information, can forecast new and existing products, good accuracy Disadvantages: some buyers unwilling to respond, time required is long (3-6 months), medium to high cost
Historical Analogy Method This is used for forecasting the demand for product or service for which there is no past demand data.
Sometimes, product may be new, but organization might have marketed other product earlier with features similar to those of the new product So, marketing personnel may use the historical analogy between the two products and derive the demand for the new product using historical data of earlier product
Quantitative methods of Forecasting

1 .Test Marketing This method is useful for forecasting sales of new product which has no historical figure It can also be used for estimating sales for an established product in a new territory Major methods used for consumer- product market testing include

a)
Full-blown test markets It consists of the company choosing a few representative cities, in which full promotion campaign is introduced, similar to what would be done in National Marketing The duration of test market varies from a few month to one year, depending on the repurchase period of the new product
Buyer surveys are carried out to get information about consumer attitude, usage and satisfaction towards new product. If the test markets show high trial and repurchase rates, the product should be launched nationally If they show a high trial rate and low purchase rate, the new product should be redesigned or dropped If they show a low trial rate and high repurchase rate the product is acceptable but more consumer should try it If the both are low, the new product should be left permanently

b. Controlled test marketing The company with new product hires a research firm and gets a panel of stores at specific geographic locations. The research firm delivers the new product to the panel of stores, arranges promotions at the stores, and measures the sales of the new product The research firm also interviews sample consumers to get their perceptions on the new products Both full blown test markets and controlled test marketing expose the new product to the competitors

c) Simulated Test Marketing In this method, about 30-40 consumers are selected, based on their brand familiarity and preferences in a particular product category. These shoppers are shown commercials or print advertisement of well known product, and also the new product, without any specific mention.
These consumers are given small amount of money and asked to buy any items in a store. The researcher of the company notes how many consumers buy the new product and competing products. These consumer are interviewed to find reasons of buying or not buying, and later, after usage of the new product, satisfaction level and repurchase intentions

2. Time Series Analysis It is a series of techniques that make forecasts based on the past pattern of data. These data are collected, observed, and recoded at regular intervals of time. These methods are useful when the market forces are somehow stable and the market show least erratic behavior. Actions taken by the firm and competitors move are not taken into account
It uses chronological ordered raw data. historical data are used to project future sales, however future events are often different from past event which make the accuracy of such methods far less than 100%. By studying the hstorical correlation of the sales level over the time, a sales manager can identify a trend and find a general indication of the possible continuation of the time series.
The major advantage of time series analysis is its objectivity as it is based on the established record of historical data. The sales manager can undertake time series analysis in 4 ways The change that has occurred as a result of general tendency of data to increase or decrease are known as secular movement. Changes that have taken place during the period of 12 months as a result of change in climate, weather condition and festivals are termed as seasonal variation
Changes that have taken place as a result of boom and depression are called cyclic variation. Changes that have taken place as a result of such unpredictable forces as floods, earthquakes, famines, etc. are classified as irregular or erratic variations
If there is a change in the company`s effort in the form of wearing out of advertising, excess of sales promotions, alteration in prices, opening of new distribution outlets, or discovery of new use of product, any such change may affect the time series and the trend may shift dramatically, thereby reducing the accuracy level of method used for forecasting.
Trend forecast of Sales

Observed sales Forecasted sales
Sales
Time
Nave Method
The
simplest trend projection is known as naive projection In this approach, the sales of future period are forecasted as the value of the sales of the previous period
Next Years Sales = This Years Sales X This Years Sales Last Years Sales
Method of semi-averages
In this method available data are divided into two parts, usually with equal number of years on both the parts Year Sales
1993 1994 1995 1996 1997 1998 1999 102 105 114 110 108 116 112 102+105+114 321 ----------- = -------- = 107
The average of the first three years will be:

3 3
Similarly, for the last three years,

108 + 116 + 112 336 ---------------------- = --------- = 112 3 3
Method of semi-averages
These
two points, 107 and 117, will be plotted to their corresponding middle years.i.e 1994 and 1998. by joining these two points, we get the trend line, which can be extended to get future value
Moving Average Method

In
this method, average value for a no. of years is taken and this average is taken as the normal or trend value for the unit of time falling at the middle of period covered in the calculation of the average. In this method, the forecaster estimates sales based on an average of previous time period
Moving Average Method

The 3-yearly moving average can be computed with the following formula: a+b+c b+c+d c+d+e d+e+f --------- , ----------- , ---------- , --------- , . 3 3 3 3
Exponential smoothing method

It is similar to the moving- average forecasting method The forecaster is allowed to vary the weights assigned to past data points It allows consideration of all past data, but less weight is placed on data as it ages Exponential smoothing is basically a weighted moving average of all past data The method is used to forecast only one period in the future Exponential smoothing techniques vary in terms of how they address trend, seasonality, cyclical and irregular influences

While
using this method, a probabilityweighting factor, or smoothing constant, is selected arbitrarily. This factor is usually between 0.1 and 0.5 but can range from something greater than zero to something less than 1.0. This value determines how sensitive the forecast will be to past data.

Next years sales= a(this years sales)+(1-a)(This years forecast) Let sale of this year is 50,000 and this year forecast was Rs 40,000. let a was given a value of 0.2 The forecast of next year would be 0.2X(50,000)+(0.8)x(40,000) = Rs 42,000
Correlation analysis
a correlation is basically the degree of linear association between two variables where one variable is treated as independent variable and sales as the dependent variable sales managers look for variables that correlate with or relate to sales correlation analysis involves the determination of whether a relation exists, and if it does, then measuring it, testing whether it is significant, and establishing the cause and effect relation the degree of relationships between the variables is called co-efficient of correlation
When
the two variable are moving in the same direction they are positively correlated and when in opposite direction they are negatively correlated. When only two variable are studied, it is simple correlation, but when the no. of variables increases to more than two. Sales manager can conduct multiple correlation. If the ratio of change is constant it is linear correlation and if not constant it is nonlinear correlation
Sales
manager also look for variable that relate to competitive market place. Factor like new store openings, the no. of new product launches, and the frequency of sales promotion campaigns undertaken by the competitors can also be taken as independent variables influencing the dependent variable i.e. sales
Regression Analysis
It is another form of correlation technique. It reveals the average relationship between two variables and this make estimation or prediction possible. It is used to incorporate independent factors that are thought to influence sales in forecasting procedures The independent variable are developed through correlation analysis or based on previously observed relationship.
Regression Analysis
Simple
regression models have only one independent variable. Multiple regression uses two or more than two independent variable such as population and sales force size, or population income and sales force size.. The relationship between the dependent and independent variables can be of two types
Regression analysis
Sales Sales
Population (Liner Relationship)
Population (Curvilinear Relationship)
What is Marketing Research?

Marketing research is the systematic design, collection, analysis, and reporting of data and findings relevant to a specific marketing situation facing the company.
ITC Used Extensive Market Research before launching the Sunfeast range of biscuits
Types of Marketing Research Firms
Syndicatedservice
Custom
Specialtyline
Types of Marketing Research Firms

Syndicate service These firm gather consumer and trade information, which they sell for fee. E.g. Nielsen, IMRB, NCAER. 2. Custom These firms are hired to carry out specific projects. They design the study and report the findings 3.Speciality Line These firm provide specialized research service e.g. Anugrah MADISON for rural market
1.
The Marketing Research Process

Define the problem Develop research plan
Collect information
Analyze information Present findings
Make decision
Step 1: Define the Problem
Define the problem Specify decision alternatives State research objectives
Step 2: Develop the Research Plan
Data Sources Research Instruments Contact Methods
Research Approach Sampling Plan
Step 2: Develop the Research Plan

1.Data Source The researcher can gather secondary data, primary data or both. Secondary data are data to see whether the problem can be Partly or wholly solved without collecting costly primary data
Research Approaches
Observation
Ethnographic
Focus Group Survey
Behavioral Data
Experimentation
Copyright 2009 Dorling Kindersley (India) Pvt. Ltd. 4-163
Research Approaches
a)Observational Research Researchers can get fresh data by observing the relevant actors and settings, observing as they shop or as they consume products. b)Ethnographic research It is a particular observational research approach that uses concepts and tools from anthropology and other social science discipline to provide deep understanding of how people live and work.
Research Approaches
c) Focus Group research A focus group is a gathering of six to ten people who are invited to spend few hours with skilled moderator in order to discuss a product, service, organization, or any other marketing entity. d) Survey Research It is the best suited for descriptive research. Companies undertake surveys to learn about people`s knowledge, beliefs, preferences, and satisfaction. It requires development of a survey instrument, usually a questionnaire, which the respondents are asked to fill up.
Focus Group in Session
Research Approaches
e) Behavioral Data Customer actual purchase reflect preferences and are normally more reliable than memory based statements made in surveys.e.g. Many high-income group customer dont buy expensive customer goods, while some low income consumer ends up buying expensive products, contrary to tier stated preferences in the survey f)Experimental Research The purpose of experimental research is to capture cause-and effect relationships by eliminating explanation of the observed findings.
Research Instruments
Questionnaires Qualitative Measures Technological Devices
Questionnaire Dos and Donts

Ensure questions are free of bias Make questions simple Make questions specific Avoid jargon Avoid sophisticated words Avoid ambiguous words
Avoid negatives Avoid hypotheticals Avoid words that could be misheard Use response bands Use mutually exclusive categories Allow for other in fixed response questions
Question TypesDichotomous
In arranging this trip, did you contact American Airlines?
Yes No
Question TypesMultiple Choice

With whom are you traveling on this trip?
No one
Spouse Spouse and children Children only Business associates/friends/relatives An organized tour group
Question TypesLikert Scale

Indicate your level of agreement with the following statement: Small airlines generally give better service than large ones. Strongly disagree Disagree Neither agree nor disagree Agree Strongly agree
Question TypesSemantic Differential

American Airlines Large ....Small Experienced..Inexperienced
Modern...Old-fashioned
Question TypesImportance Scale
Airline food service is _____ to me. Extremely important Very important Somewhat important Not very important Not at all important
Question TypesRating Scale

American Airlines food service is _____. Excellent Very good Good Fair Poor
Question Types Intention to Buy Scale

How likely are you to purchase tickets on American Airlines if in-flight Internet access were available? Definitely buy Probably buy Not sure Probably not buy
Definitely not buy
Question TypesCompletely Unstructured
What is your opinion of American Airlines?
Question TypesWord Association
What is the first word that comes to your mind when you hear the following? Airline ________________________ American _____________________
Travel ________________________
Question TypesStory Completion
I flew American a few days ago. I noticed that the exterior and interior of the plane had very bright colors. This aroused in me the following thoughts and feelings. Now complete the story. ____________________________________________ ____________________________________________ ____________________________________________ ____________________________________________ ____________________________________________ ______________
Question TypesPicture (Empty Balloons)
4-180
Question TypesThematic Apperception Test
Make up a story that reflects what you think is happening in this picture.
Qualitative Measures
Word Association
Projective Techniques
Visualization
Brand Personification
Laddering
Word association Ask subjects what words come to mind when they hear brand name. the primary purpose of freedom association task is to identify the range of possible brand association in consumer minds b) Projective Technique Give people an incomplete stimulus and ask them to complete it. One such approach is bubble exercise.
a)
c) Visualization It requires people t create collage from magazine photos or drawing to depict their perceptions d) Brand personification Ask subjects what kind of person they think of when the brand is mentioned Ìf the brand were to come alive as a person, what would be it like, what would it do, where would it liveètc. e) Laddering A series of increasingly more specific `why` questions can reveal consumer motivation, and consumer deeper more abstract goals.
Technological Devices
Galvanometers Tachistoscope Eye cameras Audiometers GPS
Sampling Plan
Sampling unit: Who is to be surveyed? Sample size: How many people should be surveyed? Sampling procedure: How should the respondents be chosen?
Table 4.2 Types of Samples

Probability Samples Nonprobability Samples Simple random Convenience Stratified random Judgment Cluster Quota
Co
Contact Methods
Mail Questionnaire Telephone Interview Personal Interview Online Interview
4
Pros and Cons of Online Research

Advantages Inexpensive Fast Accuracy of data, even for sensitive questions Versatility Disadvantages Small samples Skewed samples Technological problems Inconsistencies
What is a Marketing Decision Support System (MDSS)? A marketing decision support system is a coordinated collection of data, systems, tools, and techniques with supporting hardware and software by which an organization gathers and interprets relevant information from business and environment and turns it into a basis for marketing action.
Barriers Limiting the Use of Marketing Research
A narrow conception of the research Uneven caliber of researchers Poor framing of the problem Late and occasionally erroneous findings Personality and presentational differences
Typical Problems in Rural Research Low literacy levels require innovations in

questionnaire design scales Wide geographical dispersion requires long travels A large number of languages and dialects, requiring multiple translations Non-availability of working population at normal places of residence Poor access to women respondents Villages layout based on caste lines, requiring innovative sampling
What is a Marketing Information System (MIS)?

A marketing information system consists of people, equipment, and procedures to gather, sort, analyze, evaluate, and distribute needed, timely, and accurate information to marketing decision makers.
Information Needs Probes

What decisions do you regularly make? What information do you need to make these decisions? What information do you regularly get? What special studies do you periodically request? What information would you want that you are not getting now? What are the four most helpful improvements that could be made in the present marketing information system?
Internal Records and Marketing Intelligence

Order generation, processing, delivery, and payment cycle b)Payment history c)Sales management information, giving details on a firm`s sales, market share, profitability, and trend in each market d) Brand Monitor e) Product performance Report Several software are available which provide integrated market information at three level Transaction processing level Managerial and operational level Strategic level.
a)

Sales Information System Marketing Intelligence System
Order-to-Payment Cycle Databases, Warehousing, Data Mining

a)
The order- to- Payment Cycle Sales representatives, dealers, and customers send orders to the firm. The sales department prepares invoices, transmits copies to various departments, and back order out of stock items, shipped items generate shipping and billing documents that go to various departments

b) Sales information System Marketing manager need timely and accurate reports of current sales. E.g. Reliance petroleum uses hand- held billing machines, which can be taken near the vehicle for dispensing the bill after collecting the cash.the data from these machines can be transferred to computer in computer readable file format to enable further processing in financial accounting package

c) Databases, Data Warehousing, and data Mining Companies organize their information into databasescustomer databases, product databases, salesperson databases- and combined data from different databases Companies warehouse these data and make them easily accessible to decisions makers. By hiring analysts skilled in sophisticated statistical methods, they can mine the data and garner fresh insight into neglected customer segment, recent customer trends and other usefull information. Managers can cross-tabula6t customer information with product and salesman information
The Marketing Intelligence System
It is a set of procedures and sources manager use to obtain everyday information about developments in the marketing environment. The internal records system supplies result data, but the marketing intelligence system provides happening data
Steps to Improve Marketing Intelligence
Train sales force to scan for new developments

Motivate channel members to share intelligence Network externally Utilize a customer advisory panel Utilize government data resources
Purchase information
Collect customer feedback online
What is MKIS?
MKIS (MIS) is a set of procedures and methods for the regular, planned collection, analysis and presentation of information for use in marketing decisions
American Marketing Association
The components of a computerised MKIS

Data Bank
Statistical Bank
MKIS
Display unit
Marketing Manager
Model Bank
The components of a computerised MKIS
Data bank - raw data e.g historical sales data, secondary data Statistical bank - programmes to carry-out sales forecasts, spending projections A model bank - stores marketing models e.g Ansoffs matrix, Boston Matrix Display unit - VDU and keyboard
Analyzing Consumer Markets
Analyzing Consumer Markets
How do consumer characteristics influence buying behavior? What major psychological processes influence consumer responses to the marketing program? How do consumers make purchasing decisions? How do marketers analyze consumer decision making?
Hariyali Kisaan Bazaar: Connecting with Customers
Hariyali Kisaan Bazaar: Connecting with Customers Successful marketing requires that companies
fully connect with their customers. Adopting a holistic marketing orientation means understanding customersgaining a 360-degree view of both their daily lives and the changes that occur during their lifetimes so the right products are always marketed to the right customers in the right way. DSCLs Hariyali Kisaan Bazaar provides a wide range of products and services relevant to the target segmentIndian farmersbased on deep customer insight.
What Influences Consumer Behavior?

Cultural Factors
Social Factors
Personal Factors
Cultural Factors
Consumer behavior is the study of how individuals, groups, and organizations select, buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. Marketers must fully understand about the theory and reality of consumer behavior. Culture subculture and social class are particularly important influences on consumer buying behavior.
Cultural Factors
Culture is the fundamental determinant of persons wants and behavior. The growing child acquires a set of values, perceptions, preferences, and behaviors through his family and other key institutions A child growing up in a traditional middle-class family in India is exposed to following values: respect and care for elders, honesty and integrity, hard work, achievement and success, humanitarianism, and sacrifice. A child growing up in the US is exposed to the following values: achievement and success, ,efficiency and practicality, progress, material comfort, individualism, freedom.
Subcultures
Nationalities
Religions Racial groups
Geographic regions
Cultural Factors
Each
culture consists of smaller subcultures that provide more specific identification and socialization for their members. Subculture includes nationalities, religions, racial groups, and geographic regions. When subculture grow large and affluent enough, companies often design specialized marketing programs to serve them.
Cultural Factors
Multicultural marketing grew out of careful marketing research, which revealed that different ethnic and demographic niches did not always respond favorably to mass marketing advertising. Social Class All human societies exhibit social stratification. Stratification sometimes takes the form of a caste system, more frequently it takes the form of social classes, relatively homogeneous and enduring divisions in a society, which are hierarchically ordered , whose member share similar value, interests and behavior. Social class in US are as below
Social Classes
Upper uppers Lower uppers Upper middles Middle class Working class Upper lowers Lower lowers
Cultural Factors
Indian marketers use a term called Socioeconomic Classification(SEC), which uses a combination of the education and occupation of the chief wage earner of the house hold to classify buyers in the urban areas. This classify all the urban households into eight broad category namely, A1, A2,B1, B2, C, D, E1, and E2; with A1 signifying the highest purchase potential and E2 signifying the lowest.
Cultural Factors
Characteristic of social Classes Those within each class tend to behave more alike than person from different social classes Social class differ in dresses, speech patterns, recreational preferences, and many other characteristics. Social classes show distinct product and brand preferences in many areas, including clothing, home furnishing, leisure activities. Social classes differ in media preferences.
Social factor
Social factor which affect our buying behavior are 1.Reference Group 2.Family 3.Role and Status
Reference Groups
Membership groups Primary groups Secondary groups Aspirational groups Dissociative groups
Social factor
A person reference groups are all the groups that have direct( face to face ) or indirect influence on their attitudes or behavior. Groups having a direct influence are called membership group. Some of these group are primary groups with whom the person interacts fairly continuously and informally, such as family, friends, neighbors, and coworkers. People also belong to secondary group such as religious, professional, and trade union groups, which tend to be more formal and require less continuous interaction
Social factor
Reference group influences members in many ways. they expose an individuals to new behavior and life style, they influence attitudes and self concept, and they create pressures for conformity that may affect product and brand choices People are also influence by the groups to which they dont belong. Aspirational group are those a person hope to join, dissociative groups are those value or behavior an individuals rejects
Social factor
Where reference group influence is strong, marketers must determine how to reach and influence the groups opinion leader. An opinion leader is a person who offers informal advice or information about a specific product or product category such as which of the several brands is best or how a particular product may be used. Opinion leaders are highly confident, socially active, and involved with the category. Marketer try to reach opinion leaders by identifying their demographic and psychographic characteristics, identifying the media they read, and directing message to them
Provogue uses teenage icons as brand ambassadors and a youth targeted website to connect to its customers
Radio Shack Targets Women with Female Store Managers
Social factor
2. Family The family is the most important consumer buying organization in the society, and family members constitute the most influential primary reference group. There are two family in the buyer life a) The family of Orientation It consists of parents and siblings. from parents a person acquire an orientation towards religion, politics, a sense of personal ambition, self worth, and love. b) The family of Procreation It consist of one`s spouse and children. In a countries where parent live with grown children, their influence can be substantial.
Social factor
3. Role and Status A person participates in many groups- family, clubs, organizations. Group often are an important source of information and help to define norms of behavior. We can define a person`s position in each group to which he belongs in terms of role and status. A role consists of the activities a person is expected to perform. Each role carries a status. A VP marketing has more status than sales manager, sales manager has more status than an office clerk . People chose a product that reflect and communicate their role and actual or desired status in society. Marketers must be aware of the status symbol potential of products and brands
Personal Factors
Age
Selfconcept Lifestyle Values Personality Life cycle stage
Occupation
Wealth
Personal Factors
Age and Stage in The Life Cycle People buy different goods and services over a life-time . Taste in food , clothes and furniture, and recreation is often age related. Consumption is shaped by the family life cycle. Trends like delayed marriage, children migrating to distant cities or abroad for work leaving parents behind, tendency of professionals/ working couple to acquire assets such as house or automobile in the early stages of career has resulted in different opportunities for marketers at different stages in the consumer life cycle. Marketer should also consider critical life events or transitions- marriage, childbirth, illness , relocation, divorce, career change, as giving rise to new need.
1.
The Family Life Cycle
Personal Factors
b) Occupation and Economic circumstances Occupation also influences consumption patterns. Marketers try to identify the occupational groups that have above average interest in their product and service. Product choice is greatly affected by economic circumstances: spendable income, saving and assets and attitude toward spending and saving.
Personal Factors
c) Personality and Self concept Each person has personality characteristics that influence his behavior. By personality we mean a set of distinguishing human psychological traits that lead to relatively consistent and enduring response to environmental stimuli. Such traits are self confidence, dominance, autonomy, deference, sociability, defensiveness and adaptability. Personality can be a useful variable in analysing consumer brand choice. Consumer are likely to choose those brands whose personalities match their own.
Brand Personality
Sincerity
Excitement Competence
Sophistication
Ruggedness
Personal Factors
Consumers
often choose and use brands that have a brand personality consistent with their own actual self concept(how we view ourselves), although the match may instead be based on the consumer`s ideal self concept(how we would like to view ourselves) or even on the other self concept(how we think other see us).
Lifestyle Influences
Multi-tasking
Time-starved
Money-constrained
Personal Factors
d) Lifestyle and values People from the same subculture, social class, and occupation may lead quite different lifestyles. A lifestyle is a person`s pattern of living in the world as expressed in activities, interest, and opinions. Marketers search for relationship between their products and lifestyle groups. E.g a computer manufacturer might find that most of the computer buyer are achievement oriented and than aim the brand more clearly at achiever lifestyle.
Personal Factors
Lifestyles are shaped partly by whether consumers are money constrained or time constrained Consumer who experience time famine are prone to multitasking, doing two or more things at the same time. They will also perform tasks because time is more important than money. Companies aiming to serve them will create convenient products and services for this group. Consumer decisions are also influenced by core value, the belief systems that underlie attitudes and behaviors. who target consumers in the basis of their values belief that with appeal to people inner selves, it is possible to influence their ourselves- their purchase behavior.
Faysal Bank of Pakistan has extended banking hours for timepressed executives.
Stimulus Response Model

(Understanding Consumer Behavior)
Marketing and environmental stimuli enter the consumer consciousness, and a set of psychological process combine with certain consumer characteristics to result in decisions processes and purchase decisions. Marketer task is to understand what happens in the consumers consciousness between the arrival of the outside marketing stimuli and the ultimate purchase decisions
Model of Consumer Behavior
Key Psychological Processes
Motivation
Perception
Learning
Memory
Motivation
Some need are biogenic; they arise from physiological states of tension such as hunger, thirst ,and discomfort. Other needs are psychogenic; they arise from psychological states of tension such as need for recognition, esteem , or belonging. A need becomes a motive when it is aroused to a sufficient level of intensity to drive us to act.
Motivation
Maslows Hierarchy of Needs Behavior is driven by the lowest, unmet need Herzbergs Two-Factor Theory Behavior is guided by motivating and hygiene factors
Freuds Theory Behavior is guided by subconscious motivations
Maslows Hierarchy of Needs
Herzbergs Two-Factor Theory
Freud's Theory
It assumed that the psychological forces shaping people`s behavior are largely unconscious, and that person can not fully understand his or her own motivations. When a person examines specific brands, he will react to not only to their stated capabilities, but also to other, less conscious cues such as shape size, weight, material, color and brand name. A technique called laddering lets us trace a persons motivation from the stated instrumental ones to more terminal ones. Then the marketer can decide at what level to develop the message and appeal.
Maslow`s Theory
This
theory explains why people are driven by particular needs at particulate times Human heeds are arranged in a hierarchy from most to least pressing-physiological needs, safety needs, socials needs, esteem needs, and self actualization needs.
Herzberg`s Theory
Herzberg developed a two factor theory that distinguishes dissatisfied(factor that cause dissatisfaction) from satisfiers( factors that cause satisfaction). The absence of dissatisfies is not enough to motivate a purchase; satisfier must be present E.g. A computer that does not come with a warranty would be a dissatisfied. Yet the presence of a product warranty would not act as a satisfier or motivator of a purchase, because it is not a source of intrinsic satisfaction. Marketer should do their best to avoid dissaisfiers.although these things will not sell a product, they might easily unsell it. Marketer should identify the major satisfiers or motivators of purchase in the market and then supply them.
Perception
Selective Attention
Selective Retention Selective Distortion Subliminal Perception
Perception
A motivated person is ready to act. How he act is influenced by his view of the situation. Perception are more important than reality, because it is the perception that affect consumers actual behavior Perception is the process by which we select, organize, and interpret information inputs to create a meaningful pictures of the world. Perception is not only depends on the physical stimuli but also on the stimuli's relationship to the surrounding field and on conditions with each of us. E.g. Talkative salesperson People can emerge with different perceptions of the same object because of three perceptual process, selective attention, selective distortion and selective retention.
Perception
1.
Selective Attention Attention is allocation of processing capacity to some stimulus. The average person may be exposed to over 1500 adds or brand communication a day. Since we can not possibly attend to all these, we screen most stimuli out of out- a process called selective attention. The real challenge is to explain which stimuli people with notice
Perception
2. Selective Distortion Selective distortion is the tendency to interpret information in a way that fits our preconceptions. Consumer will often distort information to be consistent with prior brand and product belief and information. Selective distortion can work to the advantage of marketers with strong brands when consumers distort neutral or ambiguous brand information to make it more positive
Perception
3. Selective retention Most of us donts remember much of the information to which we are exposed, but we do reatin information that supports our attitude and beliefs. Because of selective retention we are likely to remember good point about a product and forgot good point about competiting product
Perception
4.Subliminal Perception Marketers embeds covers, subliminal message in ads or packaging. Consumers are not consciously aware of them, yet they affect behaviour
Learning
When we act , we learn. Learning induces changes in our behavior . Most human behavior is learned, although much learning is incidental Learning theorists believe that learning is produced through interplay of drives, stimuli, cues, responses, and reinforcement A drive is a strong internal stimulus impelling action. cues are minor stimuli that determine when, where, and how a person responds. E.g. Brand and subrand. We generalize our response to similar stimuli. A counter tendency of generalization is discrimination. It means we have learned to recognize differences in sets of similar stimuli and can adjust our responses accordingly
Learning
Learning theory teaches marketers that they can build demand for a product by associating it with strong drives, using motivation cues, and providing positive reinforcement. A new company can enter the market by appealing to the same drives that competitors use ,and by providing similar cues, because buyers are more likely to transfer loyalty to similar brands(generalization); or company might design its brand to appeal to it a different set of drives and offer strong cue inducements to switch(discrimination)
Memory
All the information and experiences we encounter as we go through life can end up in our long term memory. Associative network memory model views LTM as a set of Nodes and Links. Nodes are stored information connected by links that varies in strength. We can think a consumer brand knowledge as a node in memory with variety on linked association. The strength and organization of these associations will be important determinant of the information we can recall about the brand. Brand association consist of brand related thoughts, feelings, perception image, experiences beliefs, attitudes, and so on that become linked to the brand node.
The Buying decision Process
Consumer Buying Process
Problem Recognition Information Search Evaluation Purchase Decision Postpurchase Behavior
Problem Recognition
The buying process starts when the buyer recognizes a problem or need triggered by internal or external stimuli. With an internal stimulus, one of the person`s normal needs rise to a threshold level and becomes a drive. a need can be aroused by an external by an external stimulus. Marketers need to identify the circumstances that trigger a particular need by gathering information from a number of consumers. Marketer may need to to increase consumer motivation so a potential purchase gets serious consideration.
Information Search
a) Information Search a)Personal- Family, friends, neighbors b)Commercial- adv, websites, salespersons, dealer, packaging, displays. c)Public- Mass media, consumer-rating organization d)Experimental- Handling, examining, using the product
Successive Sets Involved in Consumer Decision Making
Information Search
b)Search Dynamics Through gathering information, the consumer learns about competing brands and their features. Out of total set individual consumer will come to know only a subset of these brand known as awareness set. Some brands, the consideration set, will meet initial buying criteria, as the consumer gather more information, only a few the choice set, will remain strong contenders. The consumer makes a final choice from this set.
Information Search
Marketers
need to identify the hierarchy if attributes that guide consumer decision making in order to understand different competitive forces and how these various set get formed. Company must strategize to get it brand into the prospect awareness, consideration and choice set
Evaluation of Alternatives
How does the consumer process competitive brand information and make a final value judgment? There are several processes, and the most current models see the consumer forming judgments largely on a conscious and rational basis. First the consumer is trying to satisfy the need. second, the consumer is looking for certain benefits from the product solutions. third, the consumer sees each product as a bundle of attributes with varying ability for delivering the benefits sought to satisfy this need
Consumers will pay the most attention to attributes that deliver the sought-after benefits. We can segment the market for a product according to attributes important to different consumer group. a)Belief and Attitude Through experience and learning, people acquire beliefs and attitudes. This in turn influence buying behaviour
B) Expectancy-Value model A consumer arrive at attitudes towards various brands through an atribute evaluation procedure.we develop a set of beliefs about where each brand stands on each attribute, This model of attitude formation posits that consumer evaluate products and services by combining their brand beliefs- the positives and negatives according to importace
Expectancy-Value model
Evaluation Of Alternatives
Suppose a consumer assigned 40% of the importance to memory capacity, 305 to graphic capability, 20% to weight and size and 10% to price Then perceived value of each computer computer A= .4(8)+.3(9)+.2(6)+.1(9)= 8 Computer b =7 Computer C =6 Computer D =5
Purchase Decision
Non Compensatory models of consumer Choice Consumer often take mental shortcut using simplified choice heuristics. Heuristics are rules of thumb or mental shortcuts in the decision process a) Conjunctive heuristic The consumer sets a minimum acceptable cutoff level for each attribute and choose the first alternative that meets the minimum standard for all attributes b) Lexicographic heuristic The consumer choose the best brand on the basis of its perceived most important attribute.
Stages between Evaluation of Alternatives and Purchase
Post Purchase Behaviour
Post purchase satisfaction Post purchase Action Post purchase use and Disposal
How Customers Use and Dispose of Products
DIFFUSION OF INNOVATIONS
CHAPTER OUTLINE
A. The diffusion process. B. The adaptation process.
A. The diffusion process
Diffusion: is a macro process concerned with the spread of a new product from its source to the consuming public. More precisely, diffusion is the process by which the acceptance of an innovation (a new product) is spread by communication (mass media, sales person) to members of a social system (a target market) over a period of time. In other words, diffusion is a process looks at what is happening in the market after the introduction of a product under a normal condition. The spread of an innovation throughout the economy or the relevant set of potential users
Diffusion of Innovations:-
The diffusion process (contn.)
A process by which an innovation is communicated through certain channels over time among the members of a social system.
The diffusion process (contn.)

EXAMPLE:The s-curve for diffusion:Shows how the number of users of a new technology grows over time (usually measured as a share of potential users).

Begins trending upward very slowly At some point becomes much steeper (as the technology spreads rapidly) Eventually flattens out because there are fewer and fewer potential users that have not already adopted. Graph shows the diffusion of some major consumer inventions in the United States during the past 100 years.
U.S. diffusion of major inventions

100 90 80 70
Share (%)
Telephone Refrigerator Washing machine
60 50 40 30 20 10 0 1900 Electric Service 1910 1920 1930 1940 1950 Year 1960
VCR
1970
1980
1990
278
2000
Four Main Elements in the Diffusion of Innovations

1. The innovation
2. Communication channels 3. Time 4. A social system
Innovation
An idea, object, or process Perceived as new By an individual or organization
State of Affairs (SOA) System
Objects
Processes
Relationships
Events
SOAs
280
The innovation of product means the existence of new product. Various approaches have been taken to define a new product or a new service, these can be classified as firm oriented, product oriented, market oriented and consumer oriented definitions.
Stages in the innovation-decision process for an individual
Knowledge Persuasion
Decision
Implementation
Confirmation
Knowledge
Awareness - What is it How-to - How does it work Principles - Why does it work
Stages in the innovation-decision process for an individual Persuasion Seeks innovation-evaluation information Knowledge Persuasion
Mass media Personal interactions
284

Decision Seeks innovation-evaluation information
Adoption: A decision to make full use of an innovation as the next course of action. Rejection: A decision not to adopt. Active Rejection: consider but then not adopt. Passive Rejection: Never considering.
Decision
Stages in the innovation-decision process The process by which a for an Invention: individual new idea is discovered or created. Re-invention: The degree to which an innovation is changed or modified by the user in the process Knowledge of its adoption and implementation. Persuasion Re-invention is not necessarily bad
Decision
Implementation

Adoption and implementation is not the last stage. Individuals often seek confirmation after adoption. Did I do the right thing? Discontinuance: a decision to reject an innovation after having previously adopted it.
Decision Implementation
Confirmation
287
Communication Channels
Communication channels are the means by which messages get from one individual to another. The nature of the information exchange will effect the transfer. Type of channels:Mass media -- efficient, awareness knowledge Interpersonal -- effective, persuasive Heterophily / Homophily Pairs if individuals alike/different in beliefs, education, social status,etc. Communication more effective when homophily Nature of diffusion implies.
TIME
Time is the backbone of the diffusion process.

Relative speed with which an innovation is adopted by members of a social system.
Differences in the rate of adoption of the same innovation in different social systems.
Some innovations are more readily adopted than others Some social systems are more ready to adopt innovations than others.
289
Social System
The diffusion of a new product usually takes place in a social setting frequently referred to as a social system. A set of interrelated units that are engaged in joint problem solving to accomplish a common goal. Structure Formal - designed Informal - Interpersonal networks Norms Established behavior patterns for the members of a social system. They define a range of tolerable behavior and serve as a guide or a standard for the members of a social system.
B. The adaptation process.
Rogers defines
"the adoption process as the mental process through which an individual passes from first hearing about an innovation to final adoption". A series of stages consumers go through, from learning of a new product to trying it and deciding to purchase it regularly or to reject it. It describes the behaviour of consumers as they purchase new products and services.
Stages in the Adoption Process

(The stages buyers go through in accepting a product)
Awareness:
Interest:
Consumer becomes aware of the new product, but lacks information about it.
Consumer seeks information about new product. Consumer considers whether trying the new product makes sense. Consumer tries new product on a small scale to improve his or her estimate of its value.
Evaluation: Trial:
Adoption:
Consumer decides to make full and regular use of the new product.
Stage
Awareness Interest
Buyers response
The buyer becomes aware of the product The buyer seeks information and is receptive to learning about the product The buyer considers the products benefits and decides whether to try the product The buyer examines, tests, or tries the product to determine if it meets his or her needs The buyer purchases the product and can be expected to use it again whenever the need for this general type of product arises
Evaluation
Trial
Adoption
Analyzing Business Market
Chapter objective
What is the business market, and how does it differ from the consumer market? What buying situations do organizational buyers face? Who participates in the business-tobusiness buying process?
Chapter Objective
How do business buyers make their decisions? How can companies build strong relationships with business customers? How do institutional buyers and government agencies do their buying?
What is Organizational Buying?

Organizational buying refers to the decision-making process by which formal organizations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers.
The Business Market versus Consumer Market

The
business market consists of all the organizations that acquire goods and services used in production of other product or service. The major industry making up business market are agriculture, forestry, fisheries; mining; manufacturing ;construction ;transportation; communication etc
Characteristics of Business Markets
Fewer, larger buyers Close suppliercustomer relationships Professional purchasing Many buying influences
Multiple sales calls Derived demand Inelastic demand Fluctuating demand Geographically concentrated buyers Direct purchasing

a)
Fewer , larger buyer The business market deals with far fewer, much larger buyer then the consumer market does. The fate of tyre company and other auto motive part depend upon major automobile manufacturing companies to get as the original equipmnt manufacturer (OEM)supplier of tyre

b)Close supplier-customer relationship Because of smaller customer base and the importance and power of larger cutomer, supplier are frequently expected to customize their offerings to individual business customer needs. C)Professional Purchasing Business goods are often purchased by trained purchase agent. Many of buying instruments requires quotations, proposals, and purchase contracts are not found in consumer buying.

D) Multiple Buying influences More people typically influence busines buying decision. Buying committee consists of technical expert and even senior management. Business marketers need to send well trained sales representative and sale team to deal with well trained buyer. E) Multiple sales call In the case of capital equipment sale for a large project it may take many attempts to fund a project and the sales cycle- between quoting a job and delivering the product

F) Inelastic demand The total demand of many business goods and services is inelastic- that is not much affected by price change, some manufacture are not going to buy much more leather if the price of leather falls, nor will by less leather if the price rise unless they can find satisfactory substitutes. G)Fluctuating demand The demand for business goods and services tends to be more volatile than the demand of consumer goods and service. A given percentage increase in consumer demand can lead to a much higher percentage in demand for plant and equipment needed for additional production

G) Geographically concentrated buyers Different type of industry in India tend to get concentrated in specific regions of different states e.g. automobile and auto ancillary in Nasik and pune. Pharma in near by Ahmadabad. Geographical concentration of producers helps to reduce the selling cost. Business market need to monitor regional shifts of certain industries. H) Direct Purchasing Business buyers often buy directly from manufactures rather than through intermediaries, especially items that are technically complex.
Buying Situation
Straight rebuy
Modified rebuy
New task
Buying Situation
Straight Rebuy In a straight rebuy,the purchasing department reorders supplies on a routine basis and chooses from suppliers on an approved list. Their goal is to get a small order and then enlarge their purchase share over time. B) Modified Rebuy The buyer wants to modify product specifications, prices, delivery requirement to the other terms. C) New Task A Purchaser buys a product or service for the first time such as an office building. The greater the cost or risk, the lrger the no. of participants and greater their information gathering. It is the marketer greatest opportunity and challenge. The process passes through several stages: awareness, interest, evaluation, trial and adoption.
A)
Systems Buying and Selling

Turnkey solution desired; bids solicited System subcomponents assembled
Prime contractors
Second-tier contractors
The Buying Center

Initiators Users Influencers Deciders Approvers
Buyers
Gatekeepers
The Buying Center

Initiators Users or other in organization who request that something be purchase b) Users Those who use the product or services. In many cases, the users initiate the buying proposal and help and help define the product requirement. c)Influencers People who influence the buying decision, often by helping define specifications and providing information for evaluating alternatives d) Deciders People who decide on product requirements or on suppliers
a)
The Buying Center

e)Approvers People who authorize the proposed actions of deciders or buyers f)Buyers People who have formal authority to select the suppliers and arrange the purchase term G) Gatekeepers People who have the power to prevent sellers or information from reaching members of the buying center
Of Concern to Business Marketers
Who are the major decision participants? What decisions do they influence? What is their level of influence? What evaluation criteria do they use?
Sales Strategies
Small Sellers
Key Buying Influencers Multilevel In-depth Selling
Large Sellers
Stages in the Buying Process:
Problem recognition General need description Product specification Supplier search Proposal solicitation Supplier selection Order-routine specification Performance review

a) Problem Recognition The buying process begins when some one in the company recognizes a problem or need that can met acquiring a good or service. The recognition can be triggered by by internal or external stimuli. Internal stimuli might be that company decides to develop a new product or and needs new equipment and material. Externally the buyer may get new ideas at a trade show, see an ad, or receive a call from a sales representative who offer a better product or a lower price Business markets can stimulate problem recognition by direct mail, telemarketing and calling prospects

b) General Need Description and Product Specification
The buyer determines the needed items general characteristics and required quantity. For complex item buyers will work with others-engineers,users-to define characteristics sch as reliability, durability, or price. Business marketer can help by describing how their products meet or even exceed the buyers need

c)Supplier search The buyer next tries to identify the most appropriate suppliers through trade directories, contact with other companies, trade ad, trade shows, and the internet. d)Proposal Solicitation The buyer next invites qualified suppliers to submit proposals. If the item is complex or expensive, the buyer will require a detailed written proposal from each qualified suppliers. After evaluating the proposals, the buyer will invite few suppliers to make formal presentations. Business marketer must be skilled in researching, writing, and presenting proposals, written proposal should be marketing documents that describe value and benefits in customer terms

e) Supplier selection Before selecting a supplier, the buying center will specify desired supplier attributes and indicate their relative importance. To rate and identify the most attractive supplieres,buying centers often use supplier evaluation model
Table 7.3 Vendor Analysis
Copyright 2009 Dorling Kindersley (India) Pvt. Ltd.
7-318

Order-Routine
Specification Performance review
Institutional and Govt.Markets
The insti. Market consist of school college and univ. hospital etc.
Identifying Market Segments and Targeting
Chapter Objective
What are the different levels of market segmentation? How can a company divide a market into segments? How should a company choose the most attractive target markets? What are the requirements for effective segmentation?
Effective Targeting Requires
Identify and profile distinct groups of buyers who differ in their needs and preferences Select one or more market segments to enter Establish and communicate the distinctive benefits of the market offering
Introduction
Companies can not connect with all customer in large, broad, or diverse market. But they can divide such markets into groups of consumers or segments with distinct needs and wants. A company then need to identify which market segments it can serve effectively. This decision requires a keen understanding of consumer behavior and careful strategic thinking.. To develop the best market plans, managers need to understand what makes each segment unique and different
Levels of Market Segmentation

Mass Marketing In mass marketing , the seller engages in the mass production, mass distribution, and mass promotion of one product to all buyer
Now a days most company are turning to micromarketing at one of four level- segments , niches, local areas, and individuals

a)
Segment Marketing A market segment consists of group customers who share a similar set of needs and wants. Segment marketing offers key benefits over mass marketing. The company can offer better design , price and can also fine tune the marketing program and activities to better reflects competitors marketing
Flexible Marketing Offerings
Naked solution: Product and service elements that all segment members value
Discretionary options: Some segment members value options but not all
Preference Segments
Homogeneous preferences exist when consumers want the same things Diffused preferences exist when consumers want very different things Clustered preferences reveal natural segments from groups with shared preferences

b) Niche Marketing A niche is a more narrowly defined customer group seeking a distinctive mix of benefits. E.g. Ezee, Crack, Astha, QTV As the customer have distinct set of needs , they will pay premium to the firm that best satisfies them: the niche is fairly small but has size, profit, and growth potential and is unlikely to attract other competitors; nicher gain certain economies through specialization
The Himalaya Drug Company serves a growing niche market by focusing on ayurvedic medicines and health supplements

C) Local Marketing Target marketing is leading to marketing programs tailored to the needs and wants of local customer group in trading areas. E.g. NRI Branches., local courier company, Spiderman3 in Bhojpuri. Bharti Matrimony.

d) Individual Marketing We can call it as customized marketing or one to one Marketing. E.g. Asian Paints and other paints company. Ruff n Tuff (Arvind Mills) ready to Stitch jeans.
Segmenting Consumer Markets

Geographic Demographic Psychographic
Behavioral
Geographic Segmentation
It calls for division of the market into different geographical units such as nations, states, regions, country city. In India one of the major geographical segmentation variable is the division of Markets into rural and Urban areas. Rural and urban markets differ on the no. of important parameter such as literacy levels, income, spending power Geographical markets also vary in their product requirement. Inverter coolers and AC. Coffee and tea.
Demographic Segmentation
Age and Life Cycle
Life Stage Gender Income Generation Social Class
In demographic segmentation, we divide the market into groups on the basis of variables such as age, family size,m family life cycle, gender, income , occupation, education, religion generation, nationality and social class. Demographic variable are important because is often associated with consumer needs and wants and they are easily measurable.
a)
Age and Life-cycle Stage Consumers wants and abilities change with age. Therefore, age and life-cycle stages are important variables to define segments. E.g. J&J baby Soap, Peers Pink Soap, cartoon Network. MTV and VTV for youngsters
b)Life Stage Persons in the same part of life cycle may differ in their life stage Life stage define a persons major concern, such as getting married, deciding to buy a home , sending child to school, taking care of older family members. Insurance c companies offer schemes for people who are planning their retirement life.
C) Gender Gender differentiation has long been applied to product categories such as clothing, hairstyle, cosmetics and magazines. Some products have been positioned as more masculine arnd more feminine.. Park avenue, positioned as a masculine brand, where as a range of women's apparel under the brand Be.
Dove Targets Women
d)Income Income segmentation is a long- standing practice in a variety of products and services. Nirma washing Powder was launched as lowest price detergent in India. C K Prahlad BOP
e) Generation
F) Social Class
Psychographic Segmentation
Psychographic is the science of using psychology and demographic to better understand consumers. In psychographic segmentation, buyers are divided into different groups on the basis of personality traits, lifestyle and value. People within the same demographic group can exhibit very different psychographic profiles. E.g. Mc D Jhtka and Halal process.
Titan watches have a wide range sub brand within their Titan range such as , Edge, regalia, Nebula, and Raga to appeal different lifestyle segment. One of the most popular commercially available classification system based of psychographic measurement is sri consulting Business intelligence VALS framework
Figure 8.1 The VALS Segmentation System
The main dimension of VALS segmentation framework are consumer Motivation (horizontal Dimension) and consumer resource(Vertical dimension) Consumer are inspired by three primary motivationideals, achievement and self expression Those motivated by ideals are guided by knowledge and principles. Those motivated by achievement look for product and services that demonstrate success to their peers Those motivated by self expression desire social and physical activity, variety, and risk
Behavioral Segmentation
Decision Roles Initiator Influencer Decider Buyer User Behavioral Variables Occasions Benefits User Status Usage Rate Buyer-Readiness Loyalty Status Attitude
Decision Roles People play five roles in a buying decision: influencer, decider, buyer, and user. Recognition of the different buying roles and specification of the people who play these roles for specific product or services are vital for marketers. This is specially used for designing the communication strategy.
Behavioral Variables a) Occasions- Arches, gift pack, Kurkure. Marketer should know at what occasion consumer are using their products and make strategy accordingly. b) Benefits Buyers are classified according to the benefits that seek. Many product categories offer different product targeted at people who seek different set of benefits such as basic cleaning , conditioner, dandruff free shampoo.
c)User Status Every product has its nonusers, exusers, potential users, first time users, and regular users, The key to attracting potential user, or nonuser, is understanding the reasons they are not using. Do they have deeply held attitude, beliefs, or behaviors or just lack of knowledge of the product oe brand benefits and usage?
d) Usage Rate Markets can be segmented into light, medium and heavy product users. Heavy users are often a small percentage of market but account for a high percentage of total consumption
The Brand Funnel Illustrates Variations in the Buyer-Readiness Stage Aware Ever tried Recent trial Occasional user Regular user Most often used
Loyalty Status
Hard-core
Split loyals Shifting loyals Switchers
Behavioral Segmentation Breakdown
The Conversion Model
Convertible
Shallow
Average
Entrenched
Users
Strongly unavailable Weakly unavailable
Nonusers
Ambivalent Available
Segmenting for Business Markets

Demographic Operating Variable
Purchasing Approaches
Situational Factors Personal Characteristics
Patterns of Target Market Selection
Market Targeting
Marketing Targeting
Once
the firm has identified its market opportunities, it must decide how many and which ones to target. Marketer are increasingly combining several variables in an effort to identify smaller better defined target groups
Effective Segmentation Criteria
Not all segment scheme are useful. Similarly, not all types of segmentation are useful. It is important to recognize that a marketer needs to use relevant variables to segment a market. Eg segmenting a market based on on age is not possible for salt , but segmentation should be based of health. To be useful, market segments must rate favorably on five key criteria

Measurable The size , Purchasing power, and characteristics of the segments can be measured. b)Substantial The segments are large and profitable enough to serve. A segment should be largest possible homogeneous group worth going after with a tailored marketing program.
a)

C)Accessible- the segment can be effectively reached and served D)Differentiable The segments are conceptually distinguishable and respond differently to different marketing mix element and programs e) Actionable Effective programs can be formulated for attracting and serving the segment.
Evaluating and selecting the Market segments

Single segment Concentration Company is concentrating on single segment b) Selective Specialization A firm selects a no. of segments, each objectively attractive and appropriate. There may be little or no synergy among the segments, but each promise to be money maker The multisegment strategy has the advantage of diversifying the firm`s risk
a)
Evaluating and selecting the Market segments

c) Product Specialization The firm makes a certain product that it sells to several different market segment. E.g. microscope d)Full Market coverage The firm attempt to serve all customer groups with all the product that might need
Figure 8.5 Segment-by-Segment Invasion Plan
Positioning
Positioning is the act of designing the company`s offering and image to occupy a distinctive place in the minds of the target market. The goal is to locate the brand in the minds of consumers to maximize the potential benefits to the firm A good brand positioning helps giude marketing strategy by clarifying the brands essence, what goals it helps the consumer achieve and how it does so in a unique way.
Brand Positioning
With
an identity in place and a value proposition specified, implementation begins. Communication objectives need to be established, and execution planned and implemented. The place to start is with a brand position statement-the cornerstone of comn.program
Brand Positioning
Brand
position is the part of the brand identity and value proposition that is to be actively communicated to the target audience and that demonstrates an advantage over competing brands. The four salient characteristics of a brand position as reflected by phrases(Part, target audience, actively communicated,tra demonstrate advantage)
Brand Positioning
1.A Part of the Identity/Value Proposition For some brands,the brand dentity and value proposition do combined into a compact statement that can serve (perhaps minor adjustment) as the brand position, but not in all the cases E.g. Mc D cleanliness Brand position can be changed without the identity or value proposition of which it is a subsets.
Brand Positioning
The Target Audience The brand position should also target a specific audience, which may be a subset of the brand`s target segment. Active Communication It implies that there should be a specific communication objectives focused on changing or strengthening the brand image or brand-customer relationship.
Brand Positioning
This
objective should be accompanied by measurement. If the goal is to create or improve the friend relationship, an agree-disagree scale could be developed Such scales could be used both in testing on communication programs and in tracking their impact.
Brand Positioning
Brand Position and the Brand Image Brand image reflects current perceptions of a brand Brand position is more aspirational,reflectin perceptions that the strategists want to have associated with the brand. In creating a brand position, a useful step is to compare brand identity with the brand image on different image dimensions
Brand Positioning
Dimension Product Brand Identity (Goal) Premium beer Brand Image (Current Reality) Premium beer
User
Personality
Young(in spirit or body)

Fun, Humorous
Middle-aged
Fun, Humorous
Functional benefits Superior Flavor

Emotional benefits Social group acceptance
Superior Flavor
(None)
Brand Positioning
Comparison of
the identity with the image will usually result communication tasks being reflected in a brand position statement. a.Augmenting an Image A brand image might be too restrictive, while the identity points the way to adding other segment or application.
Brand Positioning
The
brand position therefore attempt to add association to the brand image and to soften restrictive perceptions. b.Reinforcing on Image The brand image should not dictate the position(or identity),but neither should it be ignored Often an effective brand position will reinforce and exploit an image strength.
Brand Positioning
c.Diffusing an Image Sometimes specifying what a brand is not is as important to the integrity of the communication program as specifying what it is. Specifying that the brand is not exclusively for middle-aged users suggests visuals imagery to avoid as well as imagery to include.
Brand Positioning
3.Demonstrate an advantage The position should specify a point of superiority that is a part of value proposition The point of advantage should resonate with customers and be differentiating i.e. represent something different from what a competitors provide.
Positioning Strategy
Positioning strategy
is aimed at building brand differentiation within the value frame of the target by market. The need for competitive positioning is primarily triggered by emergence of intense competition in most of the product categories. The competition implies imminent product similarity and loss of identity.
Positioning Strategy
Positioning is
increasingly seen as a device to gain control over market by means of customer pulling brand differentiation The four question that can reveal the totality of a brand are Who am I? What am I? For whom am I? Why me?
Who am I?
Answering
this question would reveal the origin or pedigree of the brand: where it belongs or where it comes from. Identifying family or origin could give a brand a competitive advantage by allowing it to draw positives strengths of family. There r two option g
Who am I?
1.Positioning by corporate identity Brands draws a direct connection with the corporate identity and seek to play on its credential. Sometimes ,firms use the corporate brand name to label their entries in various product categories.e.g LG,Samsung. A separate brand is launched by revealing the corporate connection by a statement `From a house of.` or À quality product of
Who am I?
2.Positioning by brand endorsement In this case a successful brand is used as an endorser of a new entry. Dabur uses its successful brand vatika to promote product like shampoos and soap. Nestle used Maggi name to promote ketcup, Raymonds Park Avenue brand endorses soap ,belts aftershave.
What am i?
In
this strategies, a brands functional capabilities r used for positioning purpose. 1.Category Positioning This involves making a product jump over the category it originally belongs to and positioning it in a different way. Suryansh brand of diamonds r positioned as an investment, not as a piece of jewellery.
What am i?
2.Benefit positioning This strategy involves choosing a unique, not-yet-offered benefits to position the brand Fructies shampoo is positioned asfor strong hair. All Clear shampoo is positioned as a anti-dandruff shampoo offering the benefit of dandruff removal. g
What am i?
3.Usage and Use Time Positioning A brand may choose to preempt a particular usage or usage time for positioning purpose. Livon hair lotion is positioned as something to be used after shampoo to detangle hair. Nescafe aims to position the coffee brand as a morning beverage(Get the day started) g
What am i?
4.Price-quality Positioning A brand can choose to occupy a distinct position on price-quality spectrum. At the bottom end it means an economy, like Nirma,Breeze both low quality, low price position. At the top end, it means premium position. surf Excel and Ariel. PeterEngland,Louis PhiliPPe from Madura Garments
For whom am i?
This
strategies looks at the target market for positioning the brand. Depending upon the segmentation scheme used to divide the market,a brand can focus on a specific customer group for positioning purpose. This reveals the brands appeal to other group, but greater relevance is achieved for the target group.
For whom am i?
1 Demographic Group Variables like age,sex,education could be used to divide the market. Clinic Shampoo is positioned as a shampoo for young school-going girls market. Zandu Kesri jeevan is positioned as a strength tonic for old people. Lenovo Notebook is positioned as a laptop meant for professionals in the industries.
For whom am i?
2.Behavioral The usage volume differs in the market and this gives rise to groupings like light, heavy and medium user segments. A brand may choose to use his classification to position itself. Rath Vanaspati focus on the professional caterers segment known for bulk consumption.
For whom am i?
3.Psychographic A brand can be positioned according to the psychographic traits of the people Pepsi positioned as a drink of what they call `New generation or generation next. Asian Paints is positioned as the brand for a group of self expressive people
Why me?
This group involves positioning the brand on the basis of a unique reason A brand must have a unique benefits or attribute to give the prospects a reason to buy. Medimix ayurvedic soap is positioned as made from 24 different herbal ingredients. Anchor White boosts of being a vegetarian toothpaste. J&J `No tears Shampoo` is positioned as a non-hurting shampoo.
THANK YOU ALL FOR YOUR PARTICIPATION IN THIS PROGRAMME

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MARKETING MANAGEMENT

Dr. MUKESH MISHRA

MARKETING MANAGEMENT: DEFINITIONS

MARKETING MANAGEMENT: DEFINITIONS

MARKETING MANAGEMENT: DEFINITIONS

5. Persons 6. Places 7. Properties 8. Organizations 9. Information 10. Ideas

Good Marketing is No Accident

Good Marketing is No Accident

Good Marketing is No Accident

Good Marketing is No Accident

A Simple Marketing System

Structure of Flows in a Modern Exchange Economy

Key Customer Markets

Nonprofit/ Government Markets

Improving CMO Success

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

Core Marketing concepts

The marketplace isnt what it used to be

New Consumer Capabilities

Company Orientation toward the marketplace

Company Orientation toward the marketplace

Company Orientation toward the marketplace

Company Orientation toward the marketplace

Holistic Marketing Dimensions

Company Orientation toward the marketplace

Company Orientation toward the marketplace

Company Orientation toward the marketplace

Company Orientation toward the marketplace

Company Orientation toward the marketplace

The Marketing Mix

Company Orientation toward the marketplace

The New Four Ps

The New Four Ps

The New Four Ps

The New Four Ps

The New Four Ps

Company Orientation toward the marketplace

Company Orientation toward the marketplace

Company Orientation toward the marketplace

Company Orientation toward the marketplace

Marketing Management Tasks

Needs and Trends

Needs and Trends

Needs and Trends

The Political Environment: BusinessGovernment Relations

The Political Environment: BusinessGovernment Relations

An in-house public relations manager might

Information Requirements for Environmental Scanning

Environmental Scanning Process

Understanding Task/Performance Environment

Industry Analysis: Porters Five Forces