For MBA B – KJ SIM, Source – Kotler and Keller 15th edition

Dr Anjali Chopra

Marketing Management I – Abridged Key Points

DEFINING MARKETING FOR THE NEW REALITIES

Does Marketing Create or Satisfy Needs?

Marketing has often been defined in terms of satisfying customers’ needs and wants. Critics,
however, maintain that marketing goes beyond that and creates needs and wants that did not exist
before. They feel marketers encourage consumers to spend more money than they should on
goods and services they do not really need.

Pros - Marketers by their efforts increase peer pressure, and group thinking, by showing examples
of what others may have that they do not. An individual’s freedom to choose is substantially
weakened by constant and consistent exposure to a range of needs and wants of others.

Con: Marketing merely reflects societal needs and wants. The perception that marketers influence
consumers’ purchasing decisions discounts an individual’s freedom of choice and their individual
responsibility.

Shifts in Marketing

a) Social responsibility: the private second is taking more responsibility for improving living
conditions and firms have elevated the role of corporate social responsibility.
Sustainability is increasingly important to customers and firms.
b) New consumer capabilities: Consumers are empowered through technology, like social
media, and via expanded information, communication, and mobility
c) Company changes: Technology has also changed the way companies deliver value, as
have changing channels, heightened competition, media fragmentation, and marketing
accountability
d) Sociocultural shifts: The population in the U. S. is aging and becoming increasingly
diverse. Emerging markets will become more critical in the next decade

What is Marketing?
i. Marketing is about identifying and meeting human and social needs
ii.“Meeting needs profitably.”
iii. American Marketing Association definition: Marketing is the activity, set of institutions,
and processes for creating, communicating, delivering, and exchanging offerings that have
value for customers, clients, partners, and society at large.
iv. 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.
v.Social definition of marketing: Marketing is a societal process by which individuals and
groups obtain what they need and want through creating, offering, and freely exchanging
products and services of value with others.
vi. Selling is not the most important part of marketing; aim of marketing is to know
and understand the customer so well that the product or service fits him and sells itself.

What is Marketed? Ten main types of entities: goods, services, events, experiences,
persons, places, properties, organizations, information, and ideas.
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

 Goods: physical goods include food products, cars, refrigerators, televisions,

machines, and other mainstays of a modern economy.
 Services: represent approximately 2/3 of the U.S. economy, including airlines, hotels,
maintenance and repair people, and accountants, bankers, doctors, and management
consultants.
 Events: include time-based events, global and local events
 Experiences: marketers orchestrate several services and goods to create, stage, and
market experiences.
 Persons: include artists, musicians, CEOs, physicians, high-profile lawyers and
financiers, and other professionals often get help from marketers, and each person has
been advised to become a “brand.”
 Places: include economic development specialists, real estate agents, commercial
banks, local business associations, and advertising and public relations agencies.
 Properties: intangible rights of ownership to either real property (real estate) or
financial property (stocks and bonds).
 Organizations: include museums, performing arts organizations, corporations, and
nonprofits that use marketing to boost their public images and compete for audiences
and funds.
 Information: what books, schools, and universities produce, market, and distribute at a
price to parents, students, and communities.
 Ideas: every market offering includes a basic idea. Products and services are platforms for
delivering some idea or benefit.

vii. Eight demand states are possible:

1. Negative demand—Consumers dislike the product and may even pay to
avoid it.
2. Nonexistent demand—Consumers may be unaware of or uninterested
in the product.
3. Latent demand—Consumers may share a strong need that cannot be
satisfied by an existing product.
4. Declining demand—Consumers begin to buy the product less
frequently or not at all.
5. Irregular demand—Consumer purchases vary on a seasonal, monthly,
weekly, daily, or even hourly basis.
6. Full demand—Consumers are adequately buying all products put into
the marketplace.
7. Overfull demand—More consumers would like to buy the product
than can be satisfied.
8. Unwholesome demand—Consumers may be attracted to products that
have undesirable social consequences.

Core Marketing Concepts

A. Needs, Wants, and Demands
 Needs = basic human requirements
 Wants = when needs are directed to specific objects that might satisfy the need
 Demands = wants for specific products backed by an ability to pay
 Marketers do not create needs: Needs pre-exist marketers.
 Five types of needs:
o Stated needs
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

o Real needs
o Unstated needs
o Delight needs
o Secret needs
Target Markets, Positioning and Segmentation
 Segmentation: identification of distinct segments of buyers by identifying
demographic, psychographic, and behavioral differences between them.
 Target markets: the segment(s) present the greatest opportunities.
 For each target market, the firm develops a market offering that it positions in target
buyers’ minds as delivering some key benefit(s).

Offerings and Brands

 A value proposition is a set of benefits that satisfy a consumer’s needs.
 The intangible value proposition is made physical by an offering, which can be a
combination of products, services, information, and experiences.
 A brand is an offering from a known source. All companies strive to build a brand
image with as many strong, favorable, and unique brand associations as possible.

Value and Satisfaction

 Value is primarily a combination of quality, service, and price (qsp),
called the customer value triad. Value perceptions increase with
quality and service but decrease with price.
 Satisfaction reflects a person’s judgment of a product’s perceived
performance in relationship to expectations.

Competition: includes all the actual and potential rival offerings and substitutes a buyer
might consider.

Company Orientation toward the Marketplace

A. The Production Concept:
viii. Suggests consumers prefer products that are widely available and
inexpensive.
ix. Management aims for high production efficiency, low costs, and mass
distribution.
B. The Product Concept:
i. Consumers favor products offering the most quality, performance, or
innovative features.
ii. Managers may commit the “better-mousetrap” fallacy, believing a
better product will by itself lead people to beat a path to their door.
C. The Selling Concept:
i. Consumers and businesses, if left alone, won’t buy enough of the
organization’s products.
ii. It is practiced most aggressively with unsought goods—goods buyers
don’t normally think of buying such as insurance and cemetery plots—and
when firms with overcapacity aim to sell what they make, rather than make
what the market wants.
D. The Marketing Concept:
i. Find the right products for your customers.
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

ii. 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 target markets.
E. The Holistic Marketing Concept:
i. Based on the development, design, and implementation of marketing
programs, processes, and activities that recognize their breadth and
interdependencies.
ii. Everything matters in marketing—and that a broad, integrated
perspective is often necessary.
F. Relationship Marketing:
i. Aims to build mutually satisfying long-term relationships with key
constituents in order to earn and retain their business.
ii. Four key constituents for relationship marketing are customers,
employees, marketing partners (channels, suppliers, distributors, dealers,
agencies), and members of the financial community (shareholders,
investors, analysts).
iii. The ultimate outcome of relationship marketing is a unique company
asset called a marketing network consisting of the company and its
supporting stakeholders—customers, employees, suppliers, distributors,
retailers, and others—with whom it has built mutually profitable business
relationships.
iv. Companies develop personalized offers and focus on their most
profitable customers, products, and channels, to achieve profitable growth
and capture a larger share of each customer’s expenditures by building high
customer loyalty.
G. Integrated Marketing.
i. Two key themes:
1. many different marketing activities can create, communicate, and
deliver value
2. marketers should design and implement any one marketing activity
with all other activities in mind.
ii. The company must develop an integrated channel strategy.
iii. The company must integrate communications to they reinforce and
complement each other.
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

DEVELOPING MARKETING STRATEGIES AND PLANS

Three phases to the value creation and delivery sequence:

A) Choosing the value: homework; market segmentation, target market selection,
value positioning
B) Providing the value: identification of features, prices, distribution
C) Communicating the value: use the Internet, advertising, sales force and other
communication tools

The Value Chain

i. Every firm is a synthesis of activities performed to design, produce, market, deliver
and support its product.
ii. Primary activities
1. Inbound logistics: bringing materials into the business
2. Operations: converting materials into final products
3. Outbound logistics: shipping out final products
4. Marketing (includes sales)
5. Service
iii. Support activities
1. Procurement
2. Technology development
3. Human resource management
4. Firm infrastructure
iv. Firms examine costs and performance in each value-creating activity and
benchmark against competitors to look for ways to improve
v. Core business processes (increasingly reengineered and assigned cross-
functional teams):
1. The market-sensing process: gathering and acting upon information about
the product
2. The new-offering realization process: researching, developing, and
launching new high-quality offerings quickly and within budget
3. The customer acquisition process: defining target markets and prospecting
for new customers
The customer relationship management process: building deeper understanding, relationships, and
offerings to individual customers

What are Core Competencies?

Three characteristics
 Sources of competitive advantage that make a significant contribution to perceived
customer benefits
 Have applications to a wide variety of markets
 Are difficult for competitors imitate
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

Growth Strategies
Ansoff Matrix :
1) Intensive growth: within current businesses; product-market expansion grid is
helpful
i. Market-penetration strategy: more market share with current products in
current markets
ii. Market-development strategy: develop new markets for current
products
iii. Product-development strategy: develop new products for current
markets
iv. Diversification strategy: develop new products for new markets
2) Integrative growth: acquire related businesses
A) Use backward, forward or horizontal integrations within the industry
B) May not reach desired sales volume; challenges with integration
3) Diversification growth: identify opportunities for growth from adding attractive,
unrelated businesses
4) Downsize or divest older businesses: Prune, harvest or divest to release resources or
reduce costs

How do Marketers Spot Opportunities?

Market opportunity analysis questions

a. Can we articulate the benefits convincingly to a defined target market(s)?
b. Can we locate the target market(s) and reach them with cost-effective media and
trade channels
c. Does our company possess or have access to the critical capabilities and resources
we need to deliver the customer benefits?
d. Can we deliver the benefits better than any actual or potential competitors?
e. Will the financial rate of return meet or exceed our required threshold for
investment?

Strategic formulation
 Strategy is a game plan for getting what you want to achieve
 Porter’s generic strategies
i. Overall cost leadership
ii. Differentiation
iii. Focus

Difference between Strategy and Tactics

 Marketing strategy (mission, marketing and financial objectives, needs the marketing
offering is intended to satisfy and its competitive positioning)
 Marketing tactics (marketing activities that will be undertaken to execute the marketing
strategy)
o The product or service offering section describes the key attributes and benefits
that will appeal to target customers.
o The pricing section specifies the general price range and how it might vary across
different types of customers or channels, including any incentive or discount plans.
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

o The channel section outlines the different forms of distribution, such as direct or
indirect.
o The communications section usually offers high-level guidance about the general
message and media strategy. Firms will often develop a separate communication
plan to provide the detail necessary for agencies and other media partners to
effectively design the communication program.

COLLECTION INFORMATION, FORECASTING DEMAND, MARKET RESEARCH

I. Marketing Intelligence
A. A marketing intelligence system is a set of procedures and sources that managers
use to obtain everyday information about developments in the marketing
environment.
B. It reports “happenings” data from books, newspapers, trade publications,
customers, suppliers, distributors, managers and social media monitoring
C. Marketing intelligence gathering must be legal and ethical
D. Eight actions to improve the quantity and quality of its marketing intelligence
i. Train and motivate the sales force to spot and report new developments.
ii. Motivate distributors, retailers, and other intermediaries to pass along
important intelligence.
iii. Hire external experts to collect intelligence.
iv. Network internally and externally.
v. Set up a customer advisory panel.
vi. Take advantage of government-related data resources.
vii. Purchase information from outside research firms and vendors.
viii. Collect marketing intelligence on the Internet
1. Independent customer goods and service review forums
2. Distributor or sales agent feedback sites
3. Combo sites offering customer reviews and expert opinions
4. Customer complaint sites
5. Public blogs
E. Communicating and Acting on Marketing Intelligence: competitive intelligence
works best when it is closely coordinated with decision-making process

II. Analyzing the Macroenvironment

A. Needs and Trends
i. Create new solutions to similarly unmet needs
ii. A fad is an unpredictable, short-lived, and without social, economic
and political significance
iii. A trend is more predictable and durable than a fad; trends reveal the
shape of the future and can provide strategic direction
iv. A megatrend is a large social, economic, political and technological
change that is slow to form and, once in place, influences us for some time
B. Identifying the Major Forces -
i. Demographic
ii. Economic
iii. Socio-cultural
iv. Natural
v. Technological
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

vi. Political-legal
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

What Is the Best Type of Marketing Research?

Many market researchers have their favorite research approaches or techniques, though different
researchers often have different preferences. Some researchers maintain that the only way to really
learn about consumers or brands is through in-depth, qualitative research. Others contend that the
only legitimate and defensible form of marketing research uses quantitative measures.

The Scope of Marketing Research

I. Marketing research is the function that links the consumer, customer, and public to the
marketer through information
A. The information is used to identify and define marketing opportunities and problems;
generate, refine and evaluate marketing actions; monitor marketing performance; and
improve understanding of marketing as a process.
B. Marketing research specifies the information required to address these issues, designs
the method for collecting information, manages and implements the data collection
process, analyzes the results, and communicates the findings and their implications.

II. The Marketing Research Process

A. Step 1: Define the Problem, the Decision Alternatives, and the Research Objectives
i. Do not define the problem too broadly or too narrowly
ii.Some research is exploratory – the goal is to identify the problem and to
suggest possible solutions
iii. Some research is descriptive – it seeks to quantify demand
iv. Some research is causal – it tests a cause-and-effect relationship
B. Step 2: Develop the Research Plan
i. Develop the most efficient plan for gathering needed information
ii.Discover what it will cost to execute the plan
iii. Consider data sources
1. Secondary data – collected for another purpose; already exists
2. Primary data – freshly gathered for a specific purpose or project
iv. Consider research approaches
1. Observational research
2. Ethnographic research
3. Focus group research
4. Survey research
5. Behavioral research
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

CREATING LONG-TERM LOYALTY RELATIONSHIPS

 Customers are value maximizers. They form an expectation of value and act on it.
Buyers will buy from the firm that they perceive to offer the highest customer-
delivered value, defined as the difference between total customer benefits and total
customer cost.
 A buyer’s satisfaction is a function of the product’s perceived performance and the
buyer’s expectations. Recognizing that high satisfaction leads to high customer
loyalty, companies must ensure that they meet and exceed customer expectations.
 Losing profitable customers can dramatically affect a firm’s profits. The cost of
attracting a new customer is estimated to be five times the cost of keeping a current
customer happy. The key to retaining customers is relationship marketing.
 Quality is the totality of features and characteristics of a product or service that bear
on its ability to satisfy stated or implied needs. Marketers play a key role in achieving
high levels of total quality so that firms remain solvent and profitable.
 Marketing managers must calculate customer lifetime values of their customer base to
understand their profit implications. They must also determine ways to increase the
value of the customer base.
 Companies are also becoming skilled in customer relationship management (CRM), which
focuses on developing programs to attract and retain the right customers and meeting the
individual needs of those valued customers.

Customer-Perceived Value
a. Customers tend to be value maximizers within the bounds of search costs and
limited knowledge, mobility, and income.
b. Customers choose the offer they believe will deliver the highest value and act on it
c. Customer-perceived value is the difference between the prospective customer’s
evaluation of all the benefits and costs of an offering and the perceived
alternatives
d. Total customer benefit is the perceived monetary value of the bundle of economic,
functional and psychological benefits customers expect from a given market
offering because of the product, service, people, and image
e. Total customer cost is the perceived bundle of costs customers expect to incur in
evaluating, obtaining, using and disposing of the given market offering, including
monetary, time, energy, and psychological costs

Applying Value Concepts

 Customer value analysis is used to reveal the company’s strengths and weaknesses
relative to those of competitors
 Steps in the analysis
o Identify the major attributes and benefits that customers value
o Assess the quantitative importance of the different attributes and benefits
o Assess the company’s and competitor’s performances on the different
customer values against their rated importance
o Examine how customers in a specific segment rate the company’s
performance against a specific major competitor on an individual attribute or
benefit basis
o Monitor customer values over time
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

 Loyalty is a deeply held commitment to rebuy or repatronize a preferred product

or service in the future despite situational influences and marketing efforts having
the potential to cause switching behavior
 The value proposition consists of the whole cluster of benefits the company
promises to deliver; it is more than the core positioning of the offering.

Satisfaction is a person’s feeling of pleasure or disappointment that result from comparing a

product or service’s perceived performance (or outcome) to expectations
f. If the performance or experience falls short of expectations, the customer
is dissatisfied.
g. If it matches expectations, the customer is satisfied.
h. If it exceeds expectations, the customer is highly satisfied or delighted
i. Customer assessments of product or service performance depend on many
factors, including the type of loyalty relationship the customer has with the
brand.
j. Although the customer-centered firm seeks to create high customer
satisfaction, increasing customer satisfaction by lowering price or
increasing services may result in lower profits.
k. Expectations result from past buying experience, friends’ and associates’
advice, public information and discourse, and marketers’ and competitors’
information and promises.
l. Many companies systematically measure how well they treat customers,
identify factors shaping satisfaction and change operations and marketing
as a result because satisfaction affects retention and word of mouth

Maximizing Customer Lifetime Value

A. The 80-20 rule states that 80 percent or more of the company’s profits come from
the top 20 percent of its customers.
B. Companies need to concern themselves with Return on Customer (ROC) and how
efficiently they create value from the customers and prospects available
i. A profitable customer is a person, household, or company that over time
yields a revenue stream exceeding by an acceptable amount the company’s
cost stream for attracting, selling, and serving that customer.
ii. Marketers can assess customer profitability individually, by market
segment, or by channel

Brand communities are specialized communities of consumers and employees whose

identification and activities focus around the brand, characterized by:
 A consciousness of kind/felt connection to the brand, company, product or other
community members
 Shared rituals, stories, and traditions that help convey the meaning of the
community
 A shared moral responsibility or duty to both the community as a whole and
individual community members
 Brand communities can rise organically from brand users or can be company-
sponsored/facilitated
 The more connected members are, the more likely he or she will spend more
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

Customer relationship management is the process of carefully managing detailed

information about individual customers and all customer “touch points to maximize loyalty
I. Enables real-time customer service through effective use of inidivual account
information
II. Behavioral targeting allows companies to track online behavior of target customers
and find the best match between ads and prospects
III. Customer value management describes the company’s organization of the value or the
customer base
IV. Personalizing marketing is about making sure the brand and its marketing are as
personally relevant as possible to as many customers as possible
V. Permission marketing is the practice of marketing to consumer only after gaining their
expressed permission (in contrast to interruption marketing via mass media
campaigns)
VI. Participatory marketing is more appropriate since consumers participate in the
solution
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

ANALYZING CONSUMER MARKETS

A consumer’s buying behavior is influenced by cultural, social, and personal factors.

 Of these, cultural factors exert the broadest and deepest influence
 Culture is the fundamental determinant of a person’s wants and behavior.
 Through family and other key institutions, a child growing up in the United States is exposed
to values such as achievement and success, activity, efficiency and practicality, progress,
material comfort, individualism, freedom, external comfort, humanitarianism, and
youthfulness.
 Marketers must closely attend to cultural values in every country to understand how to best
market their existing products and find opportunities for new products.
 In addition to cultural factors, social factors such as reference groups, family, and social roles
and statuses affect our buying behavior.

The Buying Decision Process: The Five-Stage Model

A. Consumer behavior questions marketers should ask:
i. Who buys our product or service?
ii.Who makes the decision to buy the product or service?
iii. Who influences the decision to buy the product or service?
iv. How is the purchase decision made? Who assumes what role?
v.What does the customer buy? What needs must be satisfied? What wants are
fulfilled?
vi. Why do customers buy a particular brand? What benefits do they seek?
vii. Where do they go or look to buy the product or service? Online and/or
offline?
viii. When do they buy? Any seasonality factors? Any time of
day/week/month?
ix. How is our product or service perceived by customers?
x.What are customers’ attitudes toward our product or service?
xi. What social factors might influence the purchase decision?
xii. Do customers’ lifestyles influence their decisions?
xiii. How do personal, demographic, or economic factors influence the
purchase decision?

The consumer typically passes through five stages: problem recognition, information search,
evaluation of alternatives, purchase decision, and post purchase behavior.
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

ANALYZING BUSINESS MARKETS

1. Organizational buying is the decision-making process by which formal organizations

establish the need for purchased products and services, then identify, evaluate, and choose
among alternative brands and suppliers. The business market consists of all the
organizations that acquire goods and services used in the production of other products or
services that are sold, rented, or supplied to others.
2. Compared with consumer markets, business markets generally have fewer and larger
buyers, a closer customer supplier relationship, and more geographically concentrated
buyers. Demand in the business market is derived from demand in the consumer market
and fluctuates with the business cycle. Nonetheless, the total demand for many business
goods and services is quite price inelastic. Business marketers need to be aware of the role
of professional purchasers and their influencers, the need for multiple sales calls, and the
importance of direct purchasing, reciprocity, and leasing.
3. The buying center is the decision-making unit of a buying organization. It consists of
initiators, users, influencers, deciders, approvers, buyers, and gatekeepers. To influence
these parties, marketers must consider environmental, organizational, interpersonal, and
individual factors.
4. The buying process consists of eight stages called buyphases: (1) problem recognition, (2)
general need description, (3) product specification, (4) supplier search, (5) proposal
solicitation, (6) supplier selection, (7) order-routine specification, and (8) performance
review.
5. Business marketers are strengthening their brands and using technology and other
communication tools to develop effective marketing programs. They are also using
systems selling and adding services to provide customers added value.
6. Business marketers must form strong bonds and relationships with their customers. Some
customers, however, may prefer a transactional relationship.
7. The institutional market consists of schools, hospitals, nursing homes, prisons, and other
institutions that provide goods and services to people in their care. Buyers for government
organizations tend to require a great deal of paperwork from their vendors and to favor
open bidding and domestic companies. Suppliers must be prepared to adapt their offers to
the special needs and procedures found in institutional and government markets.

How Different Is Business-to-Business Marketing?

The special set of concepts and skills needed in business-to-business marketing include
professional salespeople; products that meet specific and sometimes specially engineered needs of
a set of a few customers; marketing promotional aspects that deemphasize price in exchange for
services; delivery terms; special financing arrangements; and other traditional “non-marketing”
considerations.

Finally, the other major difference between consumer and business-to-business marketing usually
involves the amount of people involved in the sale: from both the sellers firm and the purchasing
firm. In consumer selling, the user is generally the purchaser. In the business-to-business,
marketing both the selling firm and the buying firm includes members of other disciplines
(engineering, transportation, warehousing, finance, and others) from the beginning of the process
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

to the time of actual purchase. The addition of these people fosters strong ties between the two
firms but also lengthens the time and complexity of the sale.

Consider some of the consumer behavior topics for business-to-consumer (B-to-C) marketing.
How might you apply them to business-to-business (B-to-B) settings?

In the business-to-business buying situation, problem recognition, information search, evaluation

of alternatives, purchase decisions, and post-purchase behavior will differ from the consumer
market. The difference(s) lie in the amount of time involved, the degree of research expended, the
decision-maker’s role, and the evaluation of the product or service.

In the business-to-business market, more attention is paid to information search, purchase

decisions, the evaluation of alternatives, and the fact that the “user” may not be the final decision
maker. In the business-to-business market, there are seven roles demonstrated by people within the
company (initiators, users, influencers, deciders, approvers, buyers, and gatekeepers), each of
which must be considered as a factor in the selling process. In the consumer market, many of these
roles are included in the single role as buyer.

Business marketers contrast sharply with consumer markets in some ways, however. They have:
 Fewer, larger buyers
 Close supplier–customer relationships
 Professional purchasing
 Multiple buying influences
 Multiple sales calls
 Derived demand
 Inelastic demand
 Fluctuating demand
 Geographically concentrated buyers
 Direct purchasing

The buying process passes through several stages: awareness, interest, evaluation, trial, and
adoption
i. Mass media can be most important during the initial awareness stage
ii.Salespeople often have their greatest impact at the interest stage
iii. Technical sources can be most important during evaluation
iv. Online selling efforts may be useful at all stages

How B2B buying process is different

The buying center is the decision-making unit of a buying organization

 “All those individuals and groups who participate in the purchasing decision-making
process, who share some common goals and the risks arising from the decisions”
 Initiators: Users or others in the organization who request that something be purchased
 Users: Those who will use the product or service.
 Influencers: People who influence the buying decision, often by helping define
specifications and providing information for evaluating alternatives.
 Deciders: People who decide on product requirements or on suppliers
 Approvers: People who authorize the proposed actions of deciders or buyers
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

 Buyers: People who have formal authority to select the supplier and arrange the
purchase terms
 Gatekeepers: People who have the power to prevent sellers or information from
reaching members of the buying center. For example, purchasing agents, receptionists,
and telephone operators may prevent salespersons from contacting users or deciders
 Several people can occupy a given role such as user or influencer, and one person may
play multiple roles

Targeting Firms and Buying Centers

 Business marketers may divide the marketplace in many different ways to choose the
types of firms to which they will sell
 Finding the sectors with the greatest growth prospects, most profitable customers, and
most promising opportunities for the firm is crucial
 Once it has identified the type of businesses on which to focus marketing efforts, the
firm must then decide how best to sell to them.
 Whatever information the business salesperson can obtain about personalities and
interpersonal factors is useful
o Small sellers concentrate on reaching the key buying influencers
o Larger sellers go for multilevel in-depth selling
o Companies must rely more heavily on their communications programs to
reach hidden buying influences and keep current customers informed

Managing Business-to-Business Customer Relationships

o Loyalty is driven in part by supply chain management, early supplier involvement, and
purchasing alliances
o Business-to-business marketers are avoiding “spray and pray” approaches to attracting and
retaining customers in favor of honing in on their targets and developing one-to-one marketing
approaches
o The Benefits of Vertical Coordination
 Building trust is one prerequisite to enjoying healthy long-term relationships
 Provide full, honest information
 Provide employee incentives aligned to meet customer needs</
 Partner with customers to help them learn and help themselves
 Offer valid comparisons with competitive products
 Four relevant ones ways to develop relationship are availability of alternatives,
importance of supply, complexity of supply, and supply market dynamism.
 Buyer–supplier relationships are categorized into eight categories
 Basic buying and selling - simple, routine exchanges with moderate levels of
cooperation and information exchange
 Bare bones - require more adaptation by the seller and less cooperation and
information exchange
 Contractual transaction - defined by formal contract and generally have low
levels of trust, cooperation, and interaction
 Customer supply - In this traditional supply situation, competition rather than
cooperation is the dominant form of governance
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

 Cooperative systems - The partners in cooperative systems are united in

operational ways, but neither demonstrates structural commitment through
legal means or adaptation
 Collaborative - much trust and commitment lead to true partnership
 Mutually adaptive - Buyers and sellers make many relationship-specific
adaptations, but without necessarily achieving strong trust or cooperation
 Customer is king - In this close, cooperative relationship, the seller adapts to
meet the customer’s needs without expecting much adaptation or change in
exchange
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

COMPETITIVE DYNAMICS

 Growing the core or seeking organic growth—focusing on opportunities with existing

products and markets—is often a prudent way to increase sales and profits.
 A market leader has the largest market share in the relevant product market. To remain
dominant, it looks to expand total demand and protect and perhaps increase its current
share.
 A market challenger attacks the market leader and other competitors in an aggressive bid
for more market share. There are five types of general attack and specific attack
strategies.
 A market follower is a runner-up firm willing to maintain its market share and not rock
the boat. It can be a cloner, imitator, or adapter.
 A market nicher serves small market segments ignored by larger firms. The key is
specialization, which can command a premium price in the process.
 Companies should maintain a good balance of consumer and competitor monitoring and
not overly focus on competitors.
 Technologies, product forms, and brands exhibit life cycles with distinct stages, usually
introduction, growth, maturity, and decline. Most products today are in the maturity stage.
 The introduction stage is marked by slow growth and minimal profits. If successful, the
product enters a growth stage marked by rapid sales growth and increasing profits. In the
maturity stage, sales growth slows and profits stabilize. Finally, the product enters a
decline stage. The company’s task is to identify truly weak products and phase them out
with minimal impact on company profits, employees, and customers.

Do Brands Have Finite Lives?

Brands can last forever as evidenced by a number of brands that are entering their one
hundredth year of existence. For a brand to have immortality, it must continue to have a
competitive advantage in its product differentiation dimensions (product, services, personnel,
channel, and symbols). The management of the brand, how well brand management monitors
changes in the environment, customer preferences, strategies, and technology to continue to
equip the brand with point-of-differences and/or points-of-parity is the key to the brand’s
ongoing success in the marketplace.

As consumer needs and wants change, evolve, or disappear, brands must also change, evolve,
and finally expire. The loss of the brands point-of-difference in the marketplace or its lack of
point-of-parity with other brands will cause its demise. Firms can be best served to understand
and accept the inevitability of brand declines and plan for the creation of and marketing of
newer brands to replace declining brands quickly. If a brand is designed to perform a specific
function, the change in technologies may render that brand obsolete and see its market decline.

Competitive Strategies for Market Leaders

A. A market leader has the largest market share and usually leads in price changes, new-
product introductions, distribution coverage, and promotional intensity.
B. Although marketers assume well-known brands are distinctive in consumers’ minds,
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

unless a dominant firm enjoys a legal monopoly, it must maintain constant vigilance.
a. Find ways to expand total market demand
b. Protect its current share through good defensive and offensive actions
c. Increase market share, even if market size remains constant

Market-Challenger Strategies
o Defining the Strategic Objective and Opponent(s)
o Decide whom to attack:
 Attack the market leader.
 High-risk but potentially high-payoff strategy and makes good sense if the
leader is not serving the market well.
 Added benefit of distancing the firm from other challengers.
 Attack firms its own size that are not doing the job and are underfinanced.
 Attack small local and regional firms.
 Attack the status quo.

Market-Follower Strategies
 In “innovative imitation,” the innovator bears the expense of developing the new product,
getting it into distribution, and informing and educating the market.
 Patterns of “conscious parallelism” are common in capital-intensive, homogeneous-product
industries such as steel, fertilizers, and chemicals where opportunities for product
differentiation and image differentiation are low, service quality is comparable, and price
sensitivity runs high.
 Followers must define a growth path, but one that doesn’t invite competitive retaliation. We
distinguish three broad strategies:
o Cloner—The cloner emulates the leader’s products, name, and packaging with slight
variations.
o Imitator—The imitator copies some things from the leader but differentiates on
packaging, advertising, pricing, or location. The leader doesn’t mind as long as the
imitator doesn’t attack aggressively.
o Adapter—The adapter takes the leader’s products and adapts or improves them.
 Counterfeiters duplicate the leader’s product and packages and sell them on the black market
or through disreputable dealers.

Market-Nicher Strategies—be a leader in a small market, or niche

A. Smaller firms normally avoid competing with larger firms by targeting small markets of little
or no interest to the larger firms.
B. Firms with low shares of the total market can become highly profitable through smart niching.
a. Know their target customers so well they can meet their needs better than other firms
by offering high value, but they can also charge a premium price, achieve lower
manufacturing costs, and shape a strong corporate culture and vision.
b. The nicher achieves high margin, whereas the mass marketer achieves high volume.
c. Nichers have three tasks: creating niches, expanding niches, and protecting niches.
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

I. Product Life-Cycle Marketing Strategies

A. To say a product has a life cycle is to assert four things:
a. Products have a limited life
b. Product sales pass through distinct stages, each posing different challenges,
opportunities, and problems to the seller
c. Profits rise and fall at different stages of the product life cycle
d. Products require different marketing, financial, manufacturing, purchasing, and
human resource strategies in each life-cycle stage
B. Product Life Cycles
a. Most product life cycles are portrayed as bell-shaped curves, typically divided into
four stages: introduction, growth, maturity, and decline
b. Introduction—A period of slow sales growth as the product is introduced in the
market. Profits are nonexistent because of the heavy expenses of product
introduction
c. Growth—A period of rapid market acceptance and substantial profit improvement
d. Maturity—A slowdown in sales growth because the product has achieved
acceptance by most potential buyers. Profits stabilize or decline because of
increased competition
e. Decline—Sales show a downward drift and profits erode
f. Growth-slump-maturity pattern characteristic of small kitchen appliances like
bread makers and toaster ovens.

Pioneering Advantages
What are the sources of the pioneer’s advantage?
i. Early users will recall the pioneer’s brand name if the product satisfies them.
ii.The pioneer’s brand also establishes the attributes the product class should possess
iii. Customer inertia also plays a role, and there are producer advantages: economies
of scale, technological leadership, patents, ownership of scarce assets, and the ability to
erect other barriers to entry.
iv. Pioneers can spend marketing dollars more effectively and enjoy higher rates of
repeat purchases.

Marketing Strategies: Growth Stage

o Rapid climb in sales. Early adopters like the product, and additional consumers start buying it.
New competitors enter, attracted by the opportunities. They introduce new product features
and expand distribution.
o Prices stabilize or fall slightly, depending on how fast demand increases.
o Companies maintain marketing expenditures or raise them slightly to meet competition and
continue to educate the market. Sales rise much faster than marketing expenditures, causing a
welcome decline in the marketing-to-sales ratio.
o Profits increase as marketing costs are spread over a larger volume, and unit manufacturing
costs fall faster than price declines, owing to the producer-learning effect.
 For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

 To sustain rapid market share growth now, the firm:

 Improves product quality and adds new features and improved styling.
 Adds new models and flanker products (of different sizes, flavors, and so forth) to protect
the main product
 Enters new market segments
 Increases its distribution coverage and enters new distribution channels
 Shifts from awareness and trial communications to preference and loyalty communications
 Lowers prices to attract the next layer of price-sensitive buyers

Marketing Strategies: Maturity Stage

o Most products are in this stage of the life cycle, which normally lasts longer than the preceding
ones
o The maturity stage divides into three phases: growth, stable, and decaying maturity.
 In the first, sales growth starts to slow. There are no new distribution channels to fill.
New competitive forces emerge.
 In the second phase, sales per capita flatten because of market saturation. Most
potential consumers have tried the product, and future sales depend on population
growth and replacement demand.
 In the third phase, decaying maturity, the absolute level of sales starts to decline, and
customers begin switching to other products
 This third phase poses the most challenges. The sales slowdown creates overcapacity in the
industry, which intensifies competition. Weaker competitors withdraw.

Marketing Strategies: Decline Stage

 Sales decline for a number of reasons, including technological advances, shifts in
consumer tastes, and increased domestic and foreign competition.
 All can lead to overcapacity, increased price cutting, and profit erosion
 As sales and profits decline, some firms withdraw.
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

IDENTIFYING MARKET SEGMENTS AND TARGETS

1. Target marketing includes three activities: market segmentation, market targeting, and
market positioning. Market segments are large, identifiable, distinct groups within a
market.
2. The major segmentation variables for consumer markets are geographic, demographic,
psychographic, and behavioral. Marketers use them singly or in combination.
3. Business marketers use all these variables along with operating variables, purchasing
approaches, and situational factors.
4. To be useful, market segments must be measurable, substantial, accessible, differentiable,
and actionable.
5. We can target markets at four main levels: mass, multiple segments, single (or niche)
segment, and individuals.
6. A mass market targeting approach is adopted only by the biggest companies. Many
companies target multiple segments defined in various ways such as various demographic
groups who seek the same product benefit.
7. A niche is a more narrowly defined group. Globalization and the Internet have made niche
marketing more feasible for many.
8. More companies now practice individual and mass customization. The future is likely to
see more individual consumers take the initiative in designing products and brands.
9. Marketers must choose target markets in a socially responsible manner at all times.

o Market segment consists of a group of customers who share a similar set of needs and wants.
o Two broad groups of variables to segment consumer markets.
 Descriptive characteristics—geographic, demographic, and psychographic—ask
whether these segments exhibit different needs or product responses
 Behavioral considerations, such as consumer responses to benefits, usage occasions, or
brands – see whether different characteristics are associated with each consumer-
response segment.

Types of Segmentation
Geographic region divides the market into geographical units such as nations, states, regions,
counties, cities, or neighborhoods

Psychographic Segmentation uses psychology and demographics to better understand

consumers.
Buyers are divided into groups on the basis of psychological/ personality traits, lifestyle, or values.
I. Consumers whose motivation is self-expression desire social or physical activity, variety,
and risk.
II. Personality traits such as energy, self-confidence, intellectualism, novelty seeking,
innovativeness, impulsiveness, leadership, and vanity—in conjunction with key
demographics—determine an individual’s resources.
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

Behavioral Segmentation divides buyers into groups on the basis of their knowledge of, attitude
toward, use of, or response to a product
Needs-based or benefit-based segmentation identifies distinct market segments with clear
marketing implications

How should business markets be segmented?

o Demographic: Which industries should we serve?
o Company size: What size companies should we serve?
o Location: What geographical areas should we serve?
o Operating Variables
 Technology: What customer technologies should we focus on?
 User or nonuser status: Should we serve heavy users, medium users, light users, or
nonusers?
 Customer capabilities: Should we serve customers needing many or few services?

Market Targeting
Once the firm has identified its market-segment opportunities, it must decide how many and which
ones to target.
Marketers are increasingly combining several variables in an effort to identify smaller, better-
defined target groups.
I. Seven-step approach
A. Needs-based segmentation
B. Segment identification
C. Segment attractiveness
D. Segment profitability
E. Segment positioning
F. Segment “acid test”
G. Marketing mix strategy

Michael Porter’s five forces that determine the intrinsic long-run attractiveness of a market or
market segment:
i. Industry competitors
ii.Potential entrants
iii. Substitutes
iv. Buyers
v.Suppliers

A segment is unattractive if it already contains numerous, strong, or aggressive competitors.

 Unattractive if it’s stable or declining, if plant capacity must be added in large increments,
if fixed costs or exit barriers are high, or if competitors have high stakes in staying in the
segment
 Conditions will lead to frequent price wars, advertising battles, and new-product
introductions and will make it expensive to compete
 The most attractive segment is one in which entry barriers are high and exit barriers are low.
o Few new firms can enter the industry, and poorly performing firms can easily exit.
o When both entry and exit barriers are high, profit potential is high, but firms face more
risk because poorer-performing firms stay in and fight it out.
 When both entry and exit barriers are low, firms easily enter and leave the industry, and
returns are stable but low. The worst case occurs when entry barriers are low and exit
barriers are high
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

 A segment is unattractive when there are actual or potential substitutes for the product.
i. Substitutes place a limit on prices and on profits.
ii.If technology advances or competition increases in these substitute industries,
prices and profits are likely to fall.
 A segment is unattractive if buyers possess strong or growing bargaining power.
i. Buyers’ bargaining power grows when they become more concentrated or
organized, when the product represents a significant fraction of their costs,
when the product is undifferentiated, when buyers’ switching costs are low, or
when they can integrate upstream.
 To protect themselves, sellers might select buyers who have the least power to negotiate or
switch suppliers.
 A better defense is developing superior offers that strong buyers cannot refuse
 A segment is unattractive if the company’s suppliers are able to raise prices or reduce
quantity supplied.
i. Suppliers tend to be powerful when they are concentrated or organized, when
they can integrate downstream, when there are few substitutes, when the
supplied product is an important input, and when the costs of switching
suppliers are high.
ii.The best defenses are to build win-win relationships with suppliers or use
multiple supply

Full Market Coverage: a firm attempts to serve all customer groups with all the products
they might need.
 Undifferentiated marketing: mass marketing; the firm ignores segment differences and goes
after the whole market with one offer
o Product with a superior image that can be sold to the broadest number of buyers via
mass distribution and mass communications
o Appropriate when all consumers have roughly the same preferences and the market
shows no natural segments
o Creates the largest potential market, which leads to the lowest costs, which in turn can
lead to lower prices or higher margins
o Narrow product line keeps down the costs of research and development, production,
inventory, transportation, marketing research, advertising, and product management
o Undifferentiated communication program also reduces costs.
 Differentiated marketing: marketers define multiple segments and design, price, disclose, and
deliver the product or service and also fine-tune the marketing program and activities to better
reflect competitors’ marketing.
o Typically creates more total sales than undifferentiated marketing
o Increases the costs of doing business.
 Multiple Segment Specialization
 Selective specialization - a firm selects a subset of all the possible segments, each objectively
attractive and appropriate. There may be little or no synergy among the segments, but each
promises to be a moneymaker.
 The multisegment strategy also has the advantage of diversifying the firm’s risk
 A supersegment is a set of segments sharing some exploitable similarity.
 With product specialization, the firm sells a certain product to several different market
segments.
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

 With market specialization, the firm concentrates on serving many needs of a particular
customer group, such as by selling an assortment of products only to university laboratories.
 Single-Segment Concentration: the firm markets to only one particular segment.
 Through concentrated marketing, the firm gains deep knowledge of the segment’s needs and
achieves a strong market presence.
 It also enjoys operating economies by specializing its production, distribution, and promotion.
 If it captures segment leadership, the firm can earn a high return on its investment
 A niche is a more narrowly defined customer group seeking a distinctive mix of benefits
within a segment.
 Niche customers have a distinct set of needs; they will pay a 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
many competitors
 A niche marketer gains certain economies through specialization.
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

CRAFTING THE BRAND POSITIONING

1. To develop an effective positioning, a company must study competitors as well as actual

and potential customers. Marketers need to identify competitors’ strategies, objectives,
strengths, and weaknesses.
2. Developing a positioning requires identifying a frame of reference—by locating the target
market and the nature of the competition—and the optimal points-of-parity and points-of-
difference brand associations.
3. A company’s closest competitors are those seeking to satisfy the same customers and
needs and making similar offers. A company should also pay attention to latent
competitors, who may offer new or different ways to satisfy the same needs. Industry- and
market-based analyses both help uncover competitors.
4. Points-of-difference are those associations unique to the brand that are also strongly held
and favorably evaluated by consumers. These differences may be based directly on the
product or service itself or on other considerations related to employees, channels, image,
or services. Points-of-difference must be desirable (from a consumer standpoint),
deliverable (from a company standpoint), and differentiated (from a competitor
standpoint).
5. Points-of-parity are those associations not necessarily unique to the brand but perhaps
shared with other brands. They help to negate any potential weaknesses for the brand.
Category point-of-parity are associations consumers view as being necessary to a
legitimate and credible product offering within a certain category. Correlational points-of-
parity are associations designed to overcome perceived weaknesses or vulnerabilities of
the brand. Competitive point-of-parity are associations designed to negate competitors’
points-of-difference.
6. Emotional branding is becoming an important way to connect with customers and create
differentiation from competitors. Emotional differences are often most powerful when
they are connected to underlying functional differences.
7. Several different alternative approaches exist to position a product or service. These less
structured, more qualitative approaches are based on concepts such as brand narratives and
storytelling, brand journalism, and cultural branding.
8. Although small businesses should adhere to many of the branding and positioning
principles larger companies use, they must place extra emphasis on their brand elements
and secondary associations, be more focused, and create buzz for their brand.

 Identify potential points-of-difference

 Points of difference (PODs) are attributes attributes or benefits that consumers
strongly associate with a brand, positively evaluate, and believe they could not find to
the same extent with a competitive brand.
 Strong brands often have multiple points-of-difference.
 Creating strong, favorable, and unique associations is a real challenge, but an essential
one for competitive brand positioning.
 Three criteria determine whether a brand association can truly function as a point-of-
difference: desirability, deliverability, and differentiability.
 Desirable to the consumer: personally relevant and there must be a compelling
 For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

reason to believe and an understandable rationale for why the brand can
deliver the desired benefit
 Deliverable by the company: The company must have the internal resources
and commitment to feasibly and profitably create and maintain the brand
association in the minds of consumers.
o The product design and marketing offering must support the desired
association.
o The ideal brand association is preemptive, defensible, and difficult to
attack.
 Differentiating from competitors. Consumers must see the brand association as
distinctive and superior to relevant competitors.
o Identify Points-of-Parity (POPs)
 Points-of-Parity are attribute or benefit associations that are not necessarily unique to
the brand but may in fact be shared with other brands
 These types of associations come in three basic forms: category, correlational, and
competitive.
 Category points-of-parity are attributes or benefits that consumers view as
essential to a legitimate and credible offering within a certain product or
service category. They represent necessary—but not sufficient—conditions for
brand choice.
 Correlational points-of-parity are potentially negative associations that arise
from the existence of positive associations for the brand (research trade-offs
consumers make in their purchasing decisions)
 Competitive points-of-parity are associations designed to overcome perceived
weaknesses of the brand in light of competitors’ points-of-difference.
o One good way to uncover key competitive points-of-parity is to role-
play competitors’ positioning and infer their intended points-of-
difference.
o Competitor’s PODs will suggest the brand’s POPs
 Often, the key to positioning is not so much achieving a point-of-difference as achieving
points-of-parity

Perceptual maps are visual representations of consumer perceptions and preferences

 They provide quantitative pictures of market situations and the way consumers view different
products, services, and brands along various dimensions
 By overlaying consumer preferences with brand perceptions, marketers can reveal “holes” or
“openings” that suggest unmet consumer needs and marketing opportunities
 Brand positioning should have both rational and emotional components/should contain points-
of-difference and points-of-parity that appeal to both the head and the heart
 Authenticity can evoke trust, affection and strong loyalty
 Authenticity also has functional value
 Emotional brands can also provide financial payoffs
Specific branding guidelines for small businesses.
i. Find a compelling product or service performance advantage
ii.Focus on building one or two strong brands based on one or two key
associations
iii. Encourage product or service trial in any way possible
iv. Develop cohesive digital strategy to make the brand “bigger and better”
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

v.Create buzz and a loyal brand community

vi. Employ a well-integrated set of brand elements
vii. Leverage as many secondary associations as possible
viii. Creatively conduct low-cost marketing research
For MBA B – KJ SIM, Source – Kotler and Keller 15th edition
Dr Anjali Chopra

FRAMEWORK TO REFER TO:

 BCG MATRIX
 PORTER’S 5 FORCES
 PESTLE FRAMEWORK
 CAGE ANALYSIS
 PORTER’S STRATEGY
 ANSOFF MATRIX