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Sub: Introduction to Marketing

Prof. Pabitra Ranjan Chakravorty

• Evolution of Marketing
The Exchange Concept
The Production Concept
The Product Concept
The Selling Concept
The Marketing Concept

The Production Concept: Supply creates its own demand


If a product is made, somebody will want to buy it.

The Product Concept:


1. High product excellence (Quality is the key)
2. Improved products
3. New products and
4. Ideally designed and engineered products

The Selling Concept:


• Output “Sold” to Consumers
• Looks at Individual, Single Consumer
• Seeks Sales Rather than Profit
• Short-Term Goal Orientation
• Concerned with Current Inventory Reduction
• Narrower View of Consumer Needs

Marketing Mayopia :Over emphasizing on exchange concept,


production concept and selling concept overshadowing the
need want and demand of the customers ,leads to
shortsightedness of business.

A shift in orientation:
• From Production to Marketing
• From Product to Customer
• From Supply to Demand
• From Sales to Satisfaction
• From Internal to External
Marketing is the Anticipation, Management and Satisfaction
of Demand through the Exchange Process.

• Anticipation of Demand requires a firm to do consumer


research in anticipation of market’s potential and
consumers’ desires.
• Management of Demand includes:
Stimulation: motivates consumers to want firm’s
offerings
Facilitation: makes it easy to buy offerings
Regulation: involves balancing inventory to consumer
demand
• Satisfaction of Demand involves product availability,
product performance, perceptions of safety, and after-
sale services.
• An Exchange Process includes the agreement for
payment: cash/credit/promise to pay or support for a
firm, institution, idea, or place.

A social and managerial process by which individuals and


groups obtain what they need and want through creating and
exchanging products and value with others.
Marketing

The Pr
Traditi
Custom
Chart
Value Proposition: The set of benefits or values a company
promises to deliver to consumers to satisfy their needs.
The firm can enhance value by adjusting any of the elements
• Increasing the functionality of the product.
• Reducing the price.
• Giving better service support.
• Giving the customer easy access to the product.
• Offering beneficial communication.

Marketing is value creating and value delivery process

1. Value selection
2. Value creation
3. Value communication
Making value proposition
4. Value enhancement

The scope of Marketing:


• Goods
• Experiences
• Events
• Persons
• Places
• Properties
• Organizations
• Information
• Ideas

Marketing Mix: Coined by James Culliton


• The vehicle for creating delivering customer value.

This is the vehicle to win customer, there are several


subsystems within this The set of controllable, tactical
marketing tools that the firm blends to produce the response it
wants in the target market.

Product:
Characteristics of Product:
1. Variety
2. Quality
3. Design
4. Features
5. Brand name
6. Packaging
7. Services
The core or basic constituent
Associated Factors

Product Classification
• Convenience Products
• Shopping Products
• Specialty Products
• Unsought Products

Product Mix/Product Width:


• Product line.

• Product line length.

• Product depth.

Brand: A name, term, sign, symbol


• or design, or a combination of them,
• intended to identify the goods
• or services of one seller or group
• of sellers and to differentiate
• them from those of competitors.

Brand Extension:
1. Line Extension
2. Category Extension
3. Umbrella Branding
4. Brand Rejuvenation
Competitive Grow

Growth Strategies for Business Units:


• Intensive Growth
– Growth occurring when current products and current
markets have the potential for increasing sales
– Market penetration: increasing sales of current
products in current markets
– Market development: increasing sales of current
product in new markets
– Product development: increasing sales by improving
present products or developing new products for
current markets

• Diversified Growth
– Growth occurring when new products are developed
to be sold in new markets
– Advantage of diversified growth is the spread of risk
across a number of markets
– Diversification allows for a wider use of managerial,
technical, and financial resources

Price
• Price is the sum of all the values that consumers
exchange for the benefits of having or using the product
or service.
Why is it so dangerous?

(1) Price is the only element in the marketing mix that


produces revenues
(PxQ); all others represent costs.

(2) It’s the easiest element to change.

• Price is the value placed on what is exchanged.


Something of value is exchanged for satisfaction and
utility, includes tangible (functional) and intangible
(prestige) factors.

Relates directly to total revenue TR = Price * Qtty


Profits = TR - TC

Factors Affecting Price Decisions:

1. Internal Factors:

Marketing Objectives
Marketing Mix Strategy
Costs

2. External Factors

Nature of the market


and demand
Competition
Other environmental
factors (economy,
resellers, government)
Buyer Behavior
Bargaining power
of customers

Pricing Objectives :
• Market share, Pricing objectives used to increase or
maintain market share.
• Profit
• Survival, accept short term losses necessary for survival
• Customer satisfaction

Pricing Mechanism:
Cost –Based Pricing:
• To maximize the profit on short and medium term
• In this the selling price of the product is fixed by adding a margin
to the cost price

Competition Based Pricing:

1. Going Rate Pricing: Company Sets Prices based on what competitors


are charging.

2. Sealed-Bid: Company Sets Prices based on what they think


competitors
will charge.

Psychological Pricing:

Promotional Pricing:

BOGOF e.g. toothpaste, soups, garments etc

Discount Pricing:

Cash

Quantity/Volume

Seasonal
Cost-Based Versus V

Cost-Based Pricing
Skimming pricing:
Product
Product
• The practice of ‘price skimming’ involves charging a
relatively high price for a short time where a new,
innovative, or much-improved product is launched onto a
market.
• The objective with skimming is to “skim” off customers

Cost
who are willing to pay more to have the product sooner;

adopters” falls. Cost


prices are lowered later when demand from the “early

• Generate much needed initial cash flow, cover high R&D


costs.
• Attract market segment more interested in quality,
status, uniqueness etc.

Price
• Consumers demand must be inelastic.

Price
• This type of pricing structure works very well for products
that are in demand or where there are few competitors -
electronic equipment for example

Penetration Pricing:

Value
Value
• Price reduced compared to competitors to penetrate into
markets to increase sales.
• This type of pricing is used for products identified as
being in the "introductory" stage of the product life cycle
to enable the product to get a foothold in the market.
• It helps the firm for good coverage of the market
Basic principles of Pricing:

• Prices must at least cover costs


• The best way to lower the price is to lower the cost
• Prices must reflect the environment in which they
operate
• Prices must be within the range of what customers are
prepared to pay
• The price that you set should represent a fair return for
your time, talent risk and investment

Place:

Marketing Channels:

• The interface between producer and consumer


• “An array of exchange relationships that creates customer value
in acquisition and consumption of products and services”.
• Comprises a set of institutions which perform all of the activities
utilized to move a product and its title from production to
consumption.
• It is the mechanism through which goods and/or services are
moved from the manufacturer/ service provider to the user or
consumer.
• The complete sequence of marketing organizations involved in
bringing a product from the producer to the customer;
-- a system of interdependency within a set of organizations;
--a system that facilitates the exchange process.

Channel Intermediaries’ Functions

Facilitate Strategic Aims: Help channel members attain their goals

Fulfil Interaction Process: Coordinate ordering systems, delivery timing


and merchandising

Satisfy Delivery & Handling Needs: Minimize transaction uncertainty


Marketing channels create utility

• It creates three type of utility:

Time utility

Place utility

Possession utility

Typical marketing
consumer product
Typical marketing
industrial, business

Agents:
• Mainly used in international markets
• Commission agent - does not take title of the goods. Secures
orders.
• Stockist agent - hold ‘consignment’ stock
• Control is difficult due to cultural differences
• Training, motivation, etc are expensive

Retailer:

• Much stronger personal relationship with the consumer


• Hold a variety of products
• Offer consumers credit
• Products and services are promoted and merchandised by the
retailer
• Price the final product

Decisions taken for retailing:


• Choosing the store location
• Sourcing/Vendor partnership
• Merchandising
• Sales promotion
• Store operation
• Inventory
Achieving efficiencies in retail operation

Keys to Retail Success:

• Analyze the sales staff’s role


• Know your customer
• Compare the product ranges available with competitors
• Go for market expansion
• Take time to listen to companies sales representative
• Must be customer oriented
• Analyze employees relationship
• Use internal resources
• Listen to customer complaints
• Analyze accountants

Contemporary Retailing Scenario in India:


• Quantum jump in Retail Outlets
• Factors facilitating the spread:
Availability of quality products at lower price.
Improved shopping standards.
Convenient stocking/display.
Shopping is blended with Entertainment
Franchising:

• Franchiser?
Who gives the authority, and gets fee /royalty
• Franchisee?
Gets the authority to sell
• It is one type of exclusive retailing
• Retailing cum marketing

Benefits of franchiser:

• Key to rapid growth


• Brings perennial inflow of royalty
• Helps in brand building
• Ownership involvement of the franchisee
• Cost effective

Six basic channel decisions


• Direct or indirect channels
• Length of channel
• Types of intermediaries
• Number of intermediaries at each level
• Which intermediaries? Avoid intrachannel conflict

Push and Pull Strategy:


Push your product to the intermediaries,give them inventory
support,credits, infrastructure , margins so they stock your product
,and promote it as a result of which a demand is created in the mind of
the customers and finally they pull the product from the intermediaries

80-20 rule: 80% of sales is generated from 20% of the


customers

COMMUNICATION:

The Product Personality Features, several Elements


• The physical feature communicate:
• Package communicate:
• Colours Communicate:

Marketing communication through price


• Price quality equation:
• Price-status equation:
• Price as an indicator of technological superiority:

Brand name communicates

The company name communicates

Promotion:

Communication By:

• Personal Selling: Face to face transaction between a salesman


and a prospective customer
• A competitive and well trained salesman can be an effective
communication medium
• Knowledge about product, degree his familiarity with the
customer ,level of his own conviction about the quality and
performance standard of the product
• Product knowledge helps the salesman in his communication
• Customer-Sales Identification
• One who listens communicates better
• Right sales message leads to effective communication

• Publicity
By:
Sponsorship
Event management
PR

• Advertising:
• A paid form of non personal presentation and promotion
of ideas ,goods, or services by an identified sponsor.
o A paid form of communication
o A sponsor is identified
o Tries to persuade or influence the consumer to do
something
o Conveyed through mass media
o Reaches a large audience
o Is nonpersonal

Steps in developing effective communication:

• Identify the target audience:


• Determine the communication objective:
To inform:
New product/service
New uses of the product
Price change
How the product works
To build company image
To persuade:
Brand preference
Encouraging switching to your brand
Persuade to purchase now
To Remind:
The product may be required in future
Reminding when to buy
Top of the mind awareness

What Makes an Ad Effective?

• Effective ads work on two levels: with consumers and with


advertisers
• Characteristics of effective ads:
– Strategy
– Creativity
– Execution
– Advertising must be goal directed

The Roles of Advertising:


• Marketing role
• Communication role
• Societal role