Marketing Management-1

Department- Footwear

COURSE - B. Des. (Footwear Technology)

Course Code: B. Des. (FDPM)

COMPILED BY: Ms. PRACHI SHARMA

REVIEWED BY: Mr. Virender Khanna
PREFACE
This handbook is developed to assist you in in delivering the Marketing Management -1
semester 5th training program. It is designed as a resource to support the learning activity.
The Marketing Management -1 semester 5th training program is developed to equip the
trainees with the skills, attitudes and knowledge required to know about the sequence of
making different types of uppers, machines required, tools required, manpower required,
material required etc. by using defined procedures/methods. After reading this handbook
trainee will be able to know about the marketing concepts, CRM , market strategies etc. The
Program consists of four (4) learning units.
This handbook covers the four (4) learning units and it will assist you in delivering the said
program and achieving its learning objectives and outcomes. This handbook is the aid to
the trainees by telling them what need to do, when and how to do it and the expectations
once the learning activities are completed. While the assessment packet guide you in
developing the tools or instruments to measure trainee‘s overall achievement of the stated
competence. Thus it is important for you to understand the design of this program and the
mechanics in which it shall be delivered.
Your role as the teacher is to provide opportunities aimed at helping the trainees improve
their competencies. You are expected to guide and assist them as they go through the
learning activities and actual work.
The Outcome-Based Training is one form of an independent learning approach. This
approach enables trainees to be master of their own environment and in charge of their
learning. It is also characterized by the integration of theory and application as two
dimensions of an effective learning process. In this program, the outcome-based system is
consists of a combination of individualized learning activities, mentoring, field immersion
and feedback.
In this program the trainees will be given individual handbook to go through and accomplish.
They will be instructed through this handbook to accomplish learning activities as part of the
mechanism for transfer of learning from the training situation to the actual working situation.
For each competence area, trainees will formulate a specific learning plan as a guide for
applying their learning to their work setting and for their own continuing self-development. At
this point, your role as the teacher/facilitator is to guide the trainee in accomplishing their
plan.
Most part of the training activities will be conducted in the industry for better development of
specific skills. Aside from motivating them to relate concepts and skills to their own work
situations, make sure to provide the necessary opportunity for competence practice and
better internalization of such concepts and techniques. The trainees should also be
provided the opportunity to blend with the real work.
In this system, it is important to develop a sustained relationship with the trainees through a
continued involvement, where you are to offer support; guidance and assistance as the
trainee go through the learning activities and actual work.
With the mentoring approach, the trainees are grouped in learning teams with one
facilitator-mentor per team. Before learning session or immersion start in the morning, each
team and mentor meets to give feedback regarding their work, or how the group improves,
acquire set of skills for the members to become more effective trainees. You are also to
asses them at the end of each module. However, they have to be ready before the
assessment and it should be them to request for it.
Before the training start you should conduct an orientation session to brief the trainees on
how the training will proceed.
ACKNOWLEDGEMENT
FDDI firmly believes that to attain excellence, it is important that knowledge sharing shall be
carried out with best possible methodology so that quest for knowledge can be achieved.
This is the biggest challenge to the human society and to the institution in particular as they
are the torch bearer for disseminating the knowledge.
This dissemination of knowledge is possible once it's acquired. However, in acquiring the
same we discover a debt to others and thus, it becomes necessary to acknowledge those
people, we know, have directly shaped our lives and our work.
This book has been envisaged with the dream of attaining excellence in delivery of training
by employing best practices in the field of knowledge sharing and is the next logical step in
the augmentation of the knowledge domain. It focuses on standardization of learning
material, training delivery, assessment system and validation system so that knowledge
reaches with same light and equal opportunity of learning is available to all.
The preparation of training material is a team work. Shri Sharad Srivastava has made major
contribution by providing concept of learning material and teachers guide for
standardization. He also prepared sample and demonstrated to all faculties for clarity.The
main Contributors are A.K. Sharma, Mr. Suman Banerjee, Mr. V.K. Khanna, Ms. Satyam
Srivastava,Ms. Krishi Sarin,Mr. Laxman Panwar and Mr. Dharmendra Jaiswal for
motivation, guidance, and coordination involved in preparation of learning material and
implementation.Sh V.B Parvatikar has provided its leadership in this endeavour.
FDDI wishes to acknowledge the hard work of Ms. Prachi Sharma who has compiled this
training manual.
There are many individuals, whose names may not appear on this page, but their
contribution had been immense as far as development and putting the potential of their
professional knowledge in this learning material is concerned.
FDDI hope that this document will help immensely to the students and teachers alike in
understanding of the subject in more comprehensive way and will thus help them in
acquiring various skills at different levels that would lead to have an army of skilled
manpower in the country and boost the economy.

It is the reader who provides us the inputs for further improvement. The management of
FDDI welcomes all the suggestions for further improvement of this learning material.
CONTENTS
Unit 1- Marketing

 Marketing concepts 6-12

 Emerging trends in marketing 13-21
 Range building and different values 22

Unit 2 – Marketing and CRM

 Business processes and customer support 24-29

 Organization buying behavior 30-35

Unit 3 – Market strategies

 Value chain 37-44

 Customer strategy 45-48
 Pricing and related decisions 49-53
 Promotion and communication decisions 54-62
 Customer relationship 63

References 65
 Unit 1
Marketing

 Marketing concepts
 Emerging trends in marketing
 Range building & different values
Information Sheet-1 MARKETING CONCEPTS

1. Marketing concepts

Marketing concept can be described as management philosophy according to which a

firm's goals can be best achieved through identification and satisfaction of
the customers' stated and unstated needs and wants.

Marketing

Few marketing definitions available focused upon the key to marketing success
i.e. customers. Following are some of the marketing definitions available.

American Marketing Association defines marketing as:

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. (Approved October 2007)

The Chartered Institute of Marketing (CIM) says:

The management process responsible for identifying, anticipating and satisfying

customer requirements profitability.

Philip Kotler defines marketing as:

Marketing is the social process by which individuals and groups obtain what they need
and want through creating and exchanging products and value with others.

Palmer’s marketing definition is as:

Marketing is essentially about marshalling the resources of an organization so that they

meet the changing needs of the customer on whom the organization depends.

Dennis Adcock defines marketing as

The right product, in the right place, at the right time, at the right price.Dennis adcock,
using McCarthy‘s Four Ps, defines marketing in a short but realistic way.
The Marketing Concepts

The marketing concept is the philosophy that urges organization to focus on their
customers‘ needs. Analyzing their needs and making such decisions that satisfy those
needs in a better way than competitors.

To have a better understanding of marketing concept, it‘s worthwhile to review the other
philosophies that once were dominated and are still being practiced by some of the
firms.

The Production Concept (Industrial revolution – 1920′s)

The basic idea behind production concept was: The firms will produce what they can
produce efficiently. This will ensure enough supply of the products at low-cost and
demand will be created by itself.

Production concept prevailed into late 1920s because most of the products being
produced were the basic necessities and there was a huge unfulfilled demand for them.

The Sales Concept (1930s)

By early 1930s, competition had increased in production and on the other hand there
was less unfulfilled demand. So, all the firms turned towards sales concept. Now the
companies were not only producing the product but also sell it to customers through
personal selling and advertisement.

There was no concept of need identification, firms were just interested in beating
competition by selling more but neglecting customers‘ satisfaction. We can call it hard
selling.

The Marketing Concept

After World War II, there was a variety of products available in the market and
customers having discretionary income could make choices and purchase what really
fulfill their needs. In that situation, firms were forced to think about what their customers
 need , when they need it and how to keep them satisfied which is the Marketing
Concept.

The main focus of all the firms turned from hard selling towards Identification of
customer needs, making decision to fulfill those need and maintaining long-term relation
with customers by satisfying their changing needs. The Marketing concept resulted in a
separate marketing department in organization and today we can see many
organization have structured themselves as marketing organization where every
employee is contributing towards customer satisfaction whether or not he‘s a marketing
person.

So, The marketing concept totally relies upon marketing research that helps in
identification of segments, their sizes, needs, target market and then by using the right
‗Marketing Mix‗, marketing teams makes such decisions that results in customers
satisfaction.

After going through the marketing definitions and concepts, the core ideas
contained are as follows:

 The main focal point in marketing is customer needs.

 In order to maintain long-term relations with customers, future needs have to be
identified and predicted.
 Marketing is not the duty of marketing department only but everyone in the organization.

The Five Concepts Described

The Production Concept. This concept is the oldest of the concepts in

business. It holds that consumers will prefer products that are widely available and
inexpensive. Managers focusing on this concept concentrate on achieving high
production efficiency, low costs, and mass distribution. They assume that consumers
are primarily interested in product availability and low prices. This orientation makes
sense in developing countries, where consumers are more interested in obtaining the
product than in its features.

The Product Concept. This orientation holds that consumers will favor those
products that offer the most quality, performance, or innovative features. Managers
focusing on this concept concentrate on making superior products and improving them
over time. They assume that buyers admire well-made products and can appraise
quality and performance. However, these managers are sometimes caught up in a love
affair with their product and do not realize what the market needs. Management might
commit the ―better-mousetrap‖ fallacy, believing that a better mousetrap will lead people
to beat a path to its door.

The Selling Concept. This is another common business orientation. It holds that
consumers and businesses, if left alone, will ordinarily not buy enough of the selling
company‘s products. The organization must, therefore, undertake an aggressive selling
and promotion effort. This concept assumes that consumers typically sho9w buyi8ng
inertia or resistance and must be coaxed into buying. It also assumes that the company
has a whole battery of effective selling and promotional tools to stimulate more buying.
Most firms practice the selling concept when they have overcapacity. Their aim is
to sell what they make rather than make what the market wants.

The Marketing Concept. This is a business philosophy that challenges the

above three business orientations. Its central tenets crystallized in the 1950s. It holds
that the key to achieving its organizational goals (goals of the selling company) consists
of the company being more effective than competitors in creating, delivering, and
communicating customer value to its selected target customers. The marketing concept
rests on four pillars: target market, customer needs, integrated marketing and
profitability.

Distinctions between the Sales Concept and the Marketing Concept:

1. The Sales Concept focuses on the needs of the seller. The Marketing Concept
focuses on the needs of the buyer.

2. The Sales Concept is preoccupied with the seller‘s need to convert his/her
product into cash. The Marketing Concept is preoccupied with the idea of satisfying the
needs of the customer by means of the product as a solution to the customer‘s problem
(needs).

The Marketing Concept represents the major change in today‘s company

orientation that provides the foundation to achieve competitive advantage. This
philosophy is the foundation of consultative selling.

The Marketing Concept has evolved into a fifth and more refined company
orientation: The Societal Marketing Concept. This concept is more theoretical and will
undoubtedly influence future forms of marketing and selling approaches.

The Societal Marketing Concept. This concept holds that the organization‘s
task is to determine the needs, wants, and interests of target markets and to deliver the
desired satisfactions more effectively and efficiently than competitors (this is the original
Marketing Concept). Additionally, it holds that this all must be done in a way that
preserves or enhances the consumer‘s and the society‘s well-being.
 This orientation arose as some questioned whether the Marketing Concept is an
appropriate philosophy in an age of environmental deterioration, resource shortages,
explosive population growth, world hunger and poverty, and neglected social services.
Are companies that do an excellent job of satisfying consumer wants necessarily acting
in the best long-run interests of consumers and society?

The marketing concept possibily sidesteps the potential conflicts among

consumer wants, consumer interests, and long-run societal welfare. Just consider:
The fast-food hamburger industry offers tasty buty unhealthy food. The hamburgers
have a high fat content, and the restaurants promote fries and pies, two products high in
starch and fat. The products are wrapped in convenient packaging, which leads to
much waste. In satisfying consumer wants, these restaurants may be hurting consumer
health and causing environmental problems.

One of the biggest challenges of businesses today is how to attract customers and keep
them. They do so through effective marketing. This lesson will identify five different
approaches to marketing philosophies and provide examples for each.

A Pizza Shop
Let's imagine that you want to open a pizza shop. You live in a suburban area with lots
of families, so you know that the potential market is good. You've got some savings with
which to start your business and soon you are the proud owner of a little shop in the
center of your town. We'll call it Pizza Pizzazz.
Fast-forward three months. Your shop is still open, but with each month, your savings
are dwindling because you are not yet making enough profit from your small business to
cover all the expenses. You knew it usually takes about six months to get a business off
the ground, but now that the shop has hit its stride, you have some time to devote to the
question at hand: how can you best market Pizza Pizzazz to bring in new business and
generate a profit?

Marketing vs. Marketing Concepts

All businesses have the same question. And in almost all cases, the answer is the same
- marketing. Marketing is the promotion of business products or services to a target
audience. It is, in short, an action taken to bring attention to a business' offerings, be
they physical goods for sale or services offered. Common examples of marketing at
work include television commercials, billboards on the side of the road, and magazine
advertisements.
But not all businesses approach the need to market their goods and services the same
way. In fact, there are a few different approaches to how marketing can be successful
for an organization. These approaches are called marketing concepts, or a philosophy
that determines what type of marketing tools are used by a company. Marketing
concepts are driven by a clear objective that takes into account cost efficiency, social
responsibilities, and effectiveness within a particular market.

Types of Marketing Concepts

There are five distinct marketing concepts, or five different approaches to how effective
marketing is achieved by a company. Not all five philosophies will work in all industries,
as you will see. The concepts are defined below by the driving philosophy behind them;
we will identify a company's primary belief about their target audience and how they use
that information to their benefit.
Companies that utilize the production concept believe that, first and foremost,
consumers want products that are easily accessible and inexpensive. The production
concept thrives on the ability to increase output while decreasing costs.
Companies that manufacture their products overseas, for example, are a perfect
example of the production concept in action. Manufacturing retail goods offshore
decreases costs, savings they can then pass on to the customer. Lower prices can be a
might incentive for attracting new customers. Unfortunately, the company may see a
decrease in quality, and eventually a decrease in sales if the process is not kept up to
standards.
Businesses that have invested in the product concept opine that the most important
priority for consumers is quality within a product. This means customers are looking for
innovative options and continuously seeking out the best of what is currently available.
Many companies within the technology industry utilize the product concept. These
companies are constantly updating and releasing new products. It is important for tech
firms to make strong decisions on how often to release new products. Releasing too
often can leave customers frustrated that there were very few changes. Not releasing
updates often enough can leave customers feeling that the company is out of date.
Companies must review the needs of the customer and implement those changes as
quickly and efficiently as possible.
The selling concept assumes that consumers are looking for aggressive sales and
promotions from companies.
Information Sheet-2 EMERGING TRENDS IN MARKETING

EMERGING TRENDS IN MARKETING

Marketing operates within a dynamic global environment. Every decade calls upon
marketing managers to think freshly about their marketing objectives and practices.
Rapid changes can quickly make yesterday‘s winning strategies out of date. As
management Johnson & Johnson‘s concern for society is summarized in its credo and
in the company‘s actions over the years. Says one J&J executive, ―It‘s just plain good
business.‖ Linking the Concepts We‘ve covered a lot of territory. Again, slow down for a
moment and develop your own thoughts about marketing and marketing management.
What is marketing management and what does it seek to accomplish? What marketing
management philosophy appears to guide Nike? How does this compare with the
marketing philosophy that guides Johnson & Johnson? Can you think of another
company guided by a very different philosophy? Is there one marketing management
philosophy that‘s best for all companies? SpeedBump Marketing Challenges in the New
Millennium thought-leader Peter Drucker once observed, a company‘s winning formula
for the last decade will probably be its undoing in the next decade. What are the
marketing challenges as we move into the next century? Today‘s companies are
wrestling with changing customer values and orientations; economic stagnation;
environmental decline; increased global competition; and a host of other economic,
political, and social problems. However, these problems also provide marketing
opportunities. Now looking more deeply into several key trends and forces that are
changing the marketing landscape and challenging marketing strategy: the growth of
nonprofit marketing, the information technology boom, rapid globalization, the changing
world economy, and the call for more socially responsible actions. Growth of Nonprofit
Marketing In the past, marketing has been most widely applied in the business sector.
In recent years, however, marketing also has become a major component in the
strategies of many nonprofit organizations, such as colleges, hospitals, museums,
symphony orchestras, and even churches.

Consider the following examples:

✧ As hospital costs and room rates soar, many hospitals face underutilization,
especially in their maternity and pediatrics sections. Many have taken steps toward
marketing. One Philadelphia hospital, competing for maternity patients, offers a room
with a Jacuzzi and a steak-and-champagne dinner with candlelight for new parents. St.
Mary‘s Medical Center in Evanston, Indiana, uses innovative billboards to promote its
emergency care service. Other hospitals, in an effort to attract physicians, have installed
services such as saunas, chauffeurs, and private tennis courts.23

✧ Even before opening its doors, one church hired a research firm to find out what its
customers would want. The research showed that the ―unchurched‖—people with no
current church connection—found church boring and church services irrelevant to their
everyday lives. They complained churches were always hitting them up for money. So
the church added contemporary music and skits, loosened its dress codes, and
presented sermons on topics such as money management and parenting. Its direct-mail
piece read: ―Given up on the church? We don‘t blame you. Lots of people have. They‘re
fed up with boring sermons, ritual that doesn‘t mean anything . . . music that nobody
likes... [and] preachers who seem to be more interested in your wallet than you....
Church can be different. Give us a shot.‖ The results have been impressive. Within a
year of opening, the church had attracted nearly 400 members, 80 percent of whom
were not previously attending church.

✧ Many nonprofit organizations are now licensing their names and symbols to what
they deem appropriate products and making royalties off sales. Two recent examples
include the Arthritis Foundation Pain Reliever, marketed by McNeil Consumer Products,
and VFW Coffee, marketed by Tetley. The VFW name may soon be associated with a
product marketed by Adolph Coors. Royalties from such products can provide a
significant boost to the budgets of nonprofits previously dependent on donations for
survival.

Similarly, many private colleges, facing declining enrollments and rising costs, are
using marketing to compete for students and funds. They are defining target markets,
improving their communication and promotion, and responding better to student needs
and wants. Many performing arts groups—even the Lyric Opera Company of Chicago,
which has seasonal sellouts—face huge operating deficits that they must cover by more
aggressive donor marketing. Finally, many long-standing nonprofit organizations—the,
the Salvation Army, the Girl Scouts—have lost members and are now modernizing their
missions and ―products‖ to attract more members and donors.

Even government agencies have shown an increased interest in marketing. For

example, the U.S. Army has a marketing plan to attract recruits, and various
government agencies are now designing social marketing campaigns to encourage
energy conservation and concern for the environment or to discourage smoking,
excessive drinking, and drug use. Even the once-stodgy U.S. Postal Service has
developed innovative marketing plans to sell commemorative stamps, promote its
priority mail services against those of FedEx and UPS, and lift its image through
sponsorships of the U.S. Olympics and other causes.
 The continued growth of nonprofit and public-sector marketing presents new and
exciting challenges for marketing managers. The Information Technology Boom The
explosive growth in computer, telecommunications, and information technology has had
a major impact on the way companies bring value to their customers. The technology
boom has created exciting new ways to learn about and track customers, create
products and services tailored to meet customer needs, distribute products more
efficiently and effectively, and communicate with customers in large groups or one-to-
one. For example, through videoconferencing, marketing researchers at a company‘s
headquarters in New York can look in on focus groups in Chicago or Paris without ever
stepping onto a plane. With only a few clicks of a mouse button, a direct marketer can
tap into on-line data services to learn anything from what car you drive to what you read
to what flavor of ice cream you prefer. Every 20 years since 1960, the amount of
computer power that can be bought for one dollar has increased a thousandfold. That‘s
a millionfold increase in just the last 35 years.

Using today‘s vastly more powerful computers, marketers create detailed databases
and use them to target individual customers with offers designed to meet their specific
needs and buying patterns. With a new wave of communication and advertising tools—
ranging from cell phones, fax machines, and CD-ROMs to interactive TV and video
kiosks at airports and shopping malls—marketers can zero in on selected customers
with carefully targeted messages. Through electronic commerce, customers can design,
order, and pay for products and services—all without ever leaving home. From virtual
reality displays that test new products to on-line virtual stores that sell them, the boom in
computer, telecommunication, and information technology is affecting every aspect of
marketing. The Internet Perhaps the most dramatic new technology surrounds the
development of the ―information superhighway‖ and its foundation, the Internet. The
Internet is a vast and burgeoning global web of computer networks with no central
management or ownership. It was created during the late 1960s by the U.S. Department
of Defense initially to link government labs, contractors, and military installations. Today,
the Internet links computer users of all types around the world. Anyone with a PC and a
modem—or a TV with a set-top ―Web box‖—and the right software can browse the
Internet to obtain or share information on almost any subject and to interact with other
users.

Companies are using the Internet to link employees in remote offices, distribute sales
information more quickly, build closer relationships with customers and suppliers, and
sell and distribute their products more efficiently and effectively. Internet usage surged
in the early 1990s with the development of the user-friendly World Wide Web. The U.S.
Internet population grew from only 1 million people in 1994 to more than 60 million in
1998; it will grow to a projected 133 million by the year 2000. The vast and burgeoning
global web of computer networks that links computers around the world. The Internet is
truly a worldwide phenomenon. One study projects that worldwide Internet purchasing
will grow from only $296 million in 1995 to nearly $426 billion in 2002.30 Notes one
analyst, ―In just three years, the Net has gone from a playground for nerds into a vast
communications and trading center where some 90 million people swap information and
do deals around the world. . . . More than 400,000 companies have hung
www.single.com atop their digital doorways with the notion that being anywhere on the
Net means selling virtually everywhere.‖

The World Wide Web has given companies access to millions of new customers at a
fraction of the cost of print and television advertising. Companies of all types are now
attempting to snare new customers in the Web. For example:

✧ Car makers such as Toyota (www.Toyota.com) use the Internet to develop

relationships with owners as well as to sell cars. Its site offers product information,
dealer services and locations, leasing information, and much more. For example,
visitors to the site can view any of seven lifestyle magazines—alt.Terrain, A Man‘s Life,
Women‘s Web Weekly, Sportzine, Living Arts, Living Home, and Car Culture—designed
to appeal to Toyota‘s well-educated, above-average-income target audience.

✧ Sports fans can cozy up with Nike by logging onto www.nike.com, where they can
check out the latest Nike products, explore the company‘s history, download Michael
Jordan‘s latest stats, or keep up with Tiger Woods‘s latest movements. Through its Web
page, in addition to its mass-media presence, Nike relates with customers in a more
personal, one-to-one way.

✧ The Ty Web site (www.ty.com) builds relationships with children who collect Beanie
Babies by offering extra information, including the ―birth date‖ of the 50-plus toys,
highlights on special Beanie Babies each month, promotion of newly developed Beanie
Babies, and even an honor-role section that includes a child‘s photo and grades. Is it
effective? By mid-1998, based on the counter on the site, Ty.com had received almost 2
billion visitors. It seems that almost every business—from garage-based start-ups to
established giants such as IBM, GE, Marriott Hotels, JCPenney, and American
Airlines—is setting up shop on the Internet. All are racing to explore and exploit the
Web‘s possibilities for marketing, shopping, and browsing for information. However, for
all its potential, the Internet does have drawbacks. It‘s yet to be seen how many of the
millions of Web browsers will become actual buyers. Despite growing use of the Web
for shopping, in a recent survey 54 percent of Web users said that they were not likely
to use the Internet for on-line purchases ever in the future. And although the value of a
Web site is difficult to measure, the actuality is that few companies have made any
money from their Internet efforts.
 However, given the lightning speed at which Internet technology and applications are
developing, it‘s unlikely that these drawbacks will deter the millions of businesses and
consumers who are logging onto the Internet each day. ―Marketers aren‘t going to have
a choice about being on the Internet,‖ says Midori Chan, vice-president of creative
services at Interse, which helped put Windham Hill Records and Digital Equipment
Corp. on the Internet, ―To not be on the Internet . . . is going to be like not having a
phone.‖

Rapid Globalization - The world economy has undergone radical change during the past
two decades. Geographical and cultural distances have shrunk with the advent of jet
planes, fax machines, global computer and telephone hookups, world television satellite
broadcasts, and other technical advances. This has allowed companies to greatly
expand their geographical market coverage, purchasing, and manufacturing. The result
is a vastly more complex marketing environment for both companies and consumers.
Today, almost every company, large or small, is touched in some way by global
competition—from the neighborhood florist that buys its flowers from Mexican nurseries,
to the small New York clothing retailer that imports its merchandise from Asia, to the
U.S. electronics manufacturer that competes in its home markets with giant Japanese
rivals, to the large American consumer goods producer that introduces new products
into emerging markets abroad. American firms have been challenged at home by the
skillful marketing of European and Asian multinationals. Companies such as Toyota,
Siemens, Nestlé, Sony, and Samsung have often outperformed their U.S. competitors in
American markets. Similarly, U.S. companies in a wide range of industries have found
new opportunities abroad. General Motors, Exxon, IBM, General Electric, DuPont,
Motorola, Coca-Cola, and dozens of other American companies have developed truly
global operations, making and selling their products worldwide. Marketing at Work 1-3
provides just one of countless examples of U.S. companies taking advantage of
international marketing opportunities. Today, companies are not only trying to sell more
of their locally produced goods in international markets, they also are buying more
components and supplies abroad. For example, Bill Blass, one of America‘s top fashion
designers, may choose cloth woven from Australian wool with designs printed in Italy.
He will design a dress and fax the drawing to a Hong Kong agent, who will place the
order with a Chinese factory. Finished dresses will be airfreighted to New York, where
they will be redistributed to department and specialty stores around the country. Many
domestically purchased goods and services are hybrids, with design, materials
purchases, manufacturing, and marketing taking place in several countries. Americans
who decide to ―buy American‖ might be surprised to learn that a Dodge Colt was
actually made in Japan and a Honda was primarily assembled in the United States from
Americanmade parts. Thus, managers in countries around the world are asking: What is
global marketing? How does it differ from domestic marketing? How do global
competitors and forces affect our business? To what extent should we ―go global‖?
Many companies are forming strategic alliances with foreign companies, even
competitors, who serve as suppliers or marketing partners. The past few years have
produced some surprising alliances between such competitors as Ford and Mazda,
General Electric and Matsushita, and AT&T and Olivetti. Winning companies in the next
century may well be those that have built the best global networks. A large part of the
world has grown poorer during the past few decades. A sluggish world economy has
resulted in more difficult times for both consumers and marketers. Around the world,
people‘s needs are greater than ever, but in many areas, people lack the means to pay
for needed goods. Markets, after all, consist of people with needs and purchasing
power. In many cases, the latter is currently lacking. In the United States, although
wages have risen, real buying power has declined, especially for the less-skilled
members of the workforce. Many U.S. households have managed to maintain their
buying power only because both spouses work. Furthermore, many workers have lost
their jobs as manufacturers have ―downsized‖ to cut costs. Current economic conditions
create both problems and opportunities for marketers. Some companies are facing
declining demand and see few opportunities for growth. Others, however, are
developing new solutions to changing consumer problems. Many are finding ways to
offer consumers ―more for less.‖ Wal-Mart rose to market leadership on two principles,
emblazoned on every Wal-Mart store: ―Satisfaction Guaranteed‖ and ―We Sell for
Less—Always.‖ When consumers enter a Wal-Mart store, they are welcomed by a
friendly greeter and find a huge assortment of good-quality merchandise at everyday
low prices. The same principle explains the explosive growth of factory outlet malls and
discount chains—these days, customers want value. This even applies to luxury
products: Toyota introduced its successful Lexus luxury automobile with the headline,
―Perhaps the First Time in History that Trading a $72,000 Car for a $36,000 Car Could
Be Considered Trading Up.‖ The Call for More Ethics and Social Responsibility Today‘s
marketers must also take responsibility for the social and environmental impact of their
actions. Corporate ethics has become a hot topic in almost every business arena, from
the corporate boardroom to the business school classroom. And few companies can
ignore the renewed and very demanding environmental movement. The ethics and
environmental movements will place even stricter demands on companies in the future.
Consider recent environmental developments. After the fall of communism, the West
was shocked to find out about the massive environmental negligence of the former
Eastern bloc governments. In many Eastern European countries, the air is fouled, the
water is polluted, and the soil is poisoned by chemical dumping. In June1992,
representatives from more than 100 countries attended the Earth Summit in Rio de
Janeiro to consider how to handle problems such as the destruction of rain forests,
global warming, endangered species, and other environmental threats. Clearly, in the
future companies will be held to an increasingly higher standard of environmental
responsibility in their marketing and manufacturing activities.
 The New Marketing Landscape The past decade taught business firms everywhere a
humbling lesson. Domestic companies learned that they can no longer ignore global
markets and competitors. Successful firms in mature industries learned that they cannot
overlook emerging markets, technologies, and management approaches. Companies of
every sort learned that they cannot remain inwardly focused, ignoring the needs of
customers and their environment. The most powerful U.S. companies of the 1970s
included companies such as General Motors and Sears. But both of these giant
companies failed at marketing, and today both are struggling. Each failed to understand
its changing marketplace, its customers, and the need to provide value. Today, General
Motors is still trying to figure out why so many consumers around the world switched to
Japanese and European cars. Mighty Sears has lost its way, losing share both to
fashionable department and specialty stores on the one hand and to discount mass
merchandisers on the other. Today‘s forward-thinking companies are responding
strongly to the ethics and environmental movements. Here, ITT states ―All of our
companies share a common goal: To improve the quality of life. Because It‘s not just
how you make a living that‘s important, it‘s how you live.‖ As we move into the next
century, companies will have to become customer oriented and market driven in all that
they do. It‘s not enough to be product or technology driven—too many companies still
design their products without customer input, only to find them rejected in the
marketplace. It is not enough to be good at winning new customers—too many
companies forget about customers after the sale, only to lose their future business. Not
surprisingly, we are now seeing a flood of books with titles such as The Customer-
Driven Company, Customers for Life, Turning Lost Customers Into Gold, Customer
Bonding, Sustaining Knock Your Socks Off Service, and The Loyalty Effect. These
books emphasize that the key to success in the rapidly changing marketing environment
will be a strong focus on the marketplace and a total marketing commitment to providing
value to customers.

Customer

Customer Experience
Ensure the success of your programs by combining creative work with the right
automation, measurement and optimization techniques.
Emerging
Trends

Emerging Marketing Technology and Trends

Fuel growth and increase market share by capitalizing on technology trends
that help you attract and retain customers.
Data-Driven

Data-Driven Marketing
Boost returns on marketing investments by turning customer information into
valuable insights that help to compete.
Commerce

Digital Commerce
Leverage mobile networks and the Web to help market products or services
and prepare customers to buy.
Mobile

Mobile Marketing
Learn what one needs to know about mobile devices and customer behaviors
so, can tailor information and products to increase engagement and sales.
Multichannel

Multichannel Marketing
Build a program that seamlessly integrates digital and traditional media with
proven models that help align marketing investments with business objectives.
New Emerging Trends

These tends are rising to the peak of inflated expectations and will reach the plateau of
productivity in less than five years:
Real-time marketing. This moves in customer time as consumers create links to each
other and to brands.
Quantified self. - This includes wearable computing and is estimated to be a $5B
market in less than 2 years.
Digital marketing hubs. - These hubs assemble all the data together to be used
across the organization and in real-time.
Multichannel attribution- This set of techniques link specific actions marketers take to
consumer actions.
Content marketing. - Marketers need to build a content marketing supply chain and
determine how to create, curate and cultivate content.
Responsive design. - This is especially important across mobile and after Google‘s
new mobile friendly search policy.

Prevailing Trends

These trends have moved through the hype cycle and are very relevant and impactful
for marketers: Social marketing. Marketers should focus on new uses for idea
management, market research, social media engagement, social analytics, and social
campaigns.
Advocacy/loyalty marketing. Brand can focus on turning their best customers into
advocates by giving them the tools and the ability to become their salespeople.
Lead management. B2B marketers are now investing in B2C technologies to maximize
data mining, customer segmentation, behavioral analytics, multichannel campaigns, and
real time marketing.
Email marketing. No, email isn‘t dead. It‘s still valuable since more email marketing is
being consumed on the go, through multiple devices and is still extremely measurable.
Information Sheet-3 RANGE BUILDING AND DIFFERENT
VALUES

RANGE BUILDING AND DIFFERENT VALUES – Practical exercises

 Unit 2
Marketing and CRM

 Business processes and customer support

 Organization buying behavior
Information Sheet-1 Business processes and customer
support

Business process
(1) A business transaction that requests information from or changes the data in
a database.
(2) A specific event in a chain of structured business activities. The event typically
changes the state of data and/or a product and generates some type of output.
Examples of business processes include receiving orders, invoicing, shipping products,
updating employee information, or setting a marketing budget. Business processes
occur at all levels of an organization's activities and include events that the customer
sees and events that are invisible to the customer. The term also refers to the amalgam
of all the separate steps toward the final business goal.
Value, Satisfaction, and Quality Consumers usually face a broad array of products and
services that might satisfy a given need. How do they choose among these many
products and services? Consumers make buying choices based on their perceptions of
the value that various products and services deliver. Customer Value Customer value is
the difference between the values the customer gains from owning and using a product
and the costs of obtaining the product. For example, FedEx customers gain a number of
benefits. The most obvious is fast and reliable package delivery. However, when using
FedEx, customers also may receive some status .Products do not have to be physical
objects. Here, the ―product‖ is an idea: ―Smoking bothers others.‖

Customer value - The difference between the values the customer gains from owning
and using a product and the costs of obtaining the product and image values. Using
FedEx usually makes both the package sender and the receiver feel more important.
When deciding whether to send a package via FedEx, customers will weigh these and
other values against the money, effort, and psychic costs of using the service.
Moreover, they will compare the value of using FedEx against the value of using other
shippers—UPS, Airborne Express, the U.S. Postal Service—and select the one that
gives them the greatest delivered value. Customers often do not judge product values
and costs accurately or objectively. They act on perceived value. For example, does
FedEx really provide faster, more reliable delivery? If so, is this better service worth the
higher prices FedEx charges? The U.S. Postal Service argues that its express service is
comparable, and its prices are much lower. However, judging by market share, most
consumers perceive otherwise. FedEx dominates with more than a 45 percent share of
the U.S. express-delivery market, compared with the U.S. Postal Service‘s 8 percent.
The Postal Service‘s challenge is to change these customer value perceptions.

Customer Satisfaction - Customer satisfaction depends on a product‘s perceived

performance in delivering value relative to a buyer‘s expectations. If the product‘s
performance falls short of the customer‘s expectations, the buyer is dissatisfied. If
performance matches expectations, the buyer is satisfied. If performance exceeds
expectations, the buyer is delighted. Outstanding marketing companies go out of their
way to keep their customers satisfied. Satisfied customers make repeat purchases, and
they tell others about their good experiences with the product. The key is to match
customer expectations with company performance. Smart companies aim to delight
customers by promising only what they can deliver, then delivering more than they
promise.

Customer expectations are based on past buying experiences, the opinions of friends,
and marketer and competitor information and promises. Marketers must be careful to
set the right level of expectations. If they set expectations too low, they may satisfy
those who buy but fail to attract enough buyers. If they raise expectations too high,
buyers will be disappointed. The American Customer Satisfaction Index, which tracks
customer satisfaction in more than two dozen U.S. manufacturing and service
industries, shows that overall customer satisfaction has been declining slightly in recent
years.

It is unclear whether this has resulted from a decrease in product and service quality or
from an increase in customer expectations. In either case, it presents an opportunity for
companies that can deliver superior customer value and satisfaction. Today‘s most
successful companies are raising expectations—and delivering performance to match.
These companies embrace total customer satisfaction. They aim high because they
know that customers who are merely satisfied will find it easy to switch suppliers when a
better offer comes along. For example, one study showed that completely satisfied
customers are nearly 42 percent more likely to be loyal than merely satisfied customers.
Another study by AT&T showed that 70 percent of customers who say they are satisfied
with a product or service are still willing to switch to a competitor; customers who are
highly satisfied are much more loyal. Xerox found that its totally satisfied customers are
six times more likely to repurchase Xerox products over the next 18 months than its
satisfied customers.
Customer delight creates an emotional affinity for a product or service, not just a rational
preference, and this creates high customer loyalty. Highly satisfied customers are less
price sensitive, remain customers longer, and talk favorably to others about the
company and its products. Although the customer-centered firm seeks to deliver high
customer satisfaction relative to competitors, it does not attempt to maximize customer
satisfaction. A company can always increase customer satisfaction by lowering its price
or increasing its services, Customer satisfaction The extent to which a product‘s
perceived performance matches a buyer‘s expectations. but this may result in lower
profits. Thus, the purpose of marketing is to generate customer value profitably. This
requires a very delicate balance: The marketer must continue to generate more
customer value and satisfaction but not ―give away the house.‖

Quality has a direct impact on product or service performance. Thus, it is closely linked
to customer value and satisfaction. In the narrowest sense, quality can be defined as
―freedom from defects.‖ But most customer-centered companies go beyond this narrow
definition of quality. Instead, they define quality in terms of customer satisfaction. For
example, the vice-president of quality at Motorola, a company that pioneered total
quality efforts in the United States, says that ―quality has to do something for the
customer.... Our definition of a defect is ‗if the customer doesn‘t like it, it‘s a defect.‘‖

Similarly, the American Society for Quality Control defines quality as the totality of
features and characteristics of a product or service that bear on its ability to satisfy
customer needs. These customer-focused definitions suggest that quality begins with
customer needs and ends with customer satisfaction. The fundamental aim of today‘s
total quality movement has become total customer satisfaction. Total quality
management (TQM) is an approach in which all the company‘s people are involved in
constantly improving the quality of products, services, and business processes. TQM
swept the corporate boardrooms of the 1980s. Companies ranging from giants such as
AT&T, Xerox, and FedEx to smaller businesses such as the Granite Rock Company of
Watsonville, California, have credited TQM with greatly improving their market shares
and profits. However, many companies adopted the language of TQM but not the
substance, or viewed TQM as a cure-all for all the company‘s problems. Still others
became obsessed with narrowly defined TQM principles and lost sight of broader
concerns for customer value and satisfaction. As a result, many TQM programs begun
in the 1980s failed, causing a backlash against TQM. When applied in the context of
creating customer satisfaction, however, total quality principles remain a requirement for
success. Although many firms don‘t use the TQM label anymore, for most top
companies customer-driven quality has become a way of doing business. Most
customers will no longer tolerate even average quality. Companies today have no
choice but to adopt quality concepts if they want to stay in the race, let alone be
profitable. Thus, the task of improving product and service quality should be a
company‘s top priority. However, quality programs must be designed to produce
measurable results. Many companies now apply the notion of ―return on quality (ROQ).‖
They make certain that the quality they offer is the quality that customers want. This
quality, in turn, yields returns in the form of improved sales and profits.

Marketers have two major responsibilities in a quality-centered company. First, they

must participate in forming strategies that will help the company win through total quality
excellence. They must be the customer‘s watchdog or guardian, complaining loudly for
the customer when the product or the service is not right. Second, marketers must
deliver marketing quality as well as production quality. They must perform each
marketing activity—marketing research, sales training, advertising, customer service,
and others—to high standards. Marketing at Work 1-1 presents some important
conclusions about total marketing quality strategy.
Information Sheet-2 ORGANIZATION BUYING BEHAVIOUR

ORGANIZATION BUYING PROCESS AND BUYING BEHAVIOUR

Markets - The concepts of exchange and relationships lead to the concept of a market.
A market is the set of actual and potential buyers of a product. These buyers share a
particular need or want that can be satisfied through exchanges and relationships.
Thus, the size of a market depends on the number of people who exhibit the need, have
resources to engage in exchange, and are willing to offer these resources in exchange
for what they want. Originally the term market stood for the place where buyers and
sellers gathered to exchange their goods, such as a village square. Economists use the
term market to refer to a collection of buyers and sellers who transact in a particular
product class, as in the housing market or the grain market. Marketers, however, see
the sellers as constituting an industry and the buyers as constituting a market. Modern
economies operate on the principle of division of labor, whereby each person
specializes in producing something, receives payment, and buys needed things with this
money. Thus, modern economies abound in markets. Producers go to resource markets
(raw material markets, labor markets, money markets), buy resources, turn them into
goods and services, and sell them to intermediaries, who sell them to consumers. The
consumers sell their labor, for which they receive income to pay for the goods and
services that they buy. The government is another market that plays several roles. It
buys goods from resource, producer, and intermediary markets; it pays them; it taxes
these markets (including consumer markets); and it returns needed public services.
Thus, each nation‘s economy and the whole world economy consist of complex,
interacting sets of markets that are linked through exchange processes. Marketers are
keenly interested in markets. Their goal is to understand the needs and wants of
specific markets and to select the markets that they can serve best. In turn, they can
develop products and services that will create value and satisfaction for customers in
these markets, resulting in sales and profits for the company.

Organization buying is 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.
Organization buying is 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. (Webster and Wind)

Some of the characteristics of organizational buyers are:

1. Consumer market is a huge market in millions of consumers where organizational
buyers are limited in number for most of the products.

2. The purchases are in large quantities.

3. Close relationships and service are required.

4. Demand is derived from the production and sales of buyers.

5. Demand fluctuations are high as purchases from business buyers magnify fluctuation
in demand for their products.

6. The organizational buyers are trained professionals in purchasing.

7. Several persons in organization influence purchase.

8. Lot of buying occurs in direct dealing with manufacturers.

Organizational Buying Situations

Straight rebuy

In this buying situation, only purchasing department is involved. Thet get an information
from inventory control department or section to reorder the material or item and they
seek quotations from vendors in an approved list.

The "in-suppliers" make efforts to maintain product and service quality. The "out-
suppliers" have to make efforts to get their name list in the approved vendors' list and
for this purpose they have to offer something new or find out any issues of
dissatisfaction with current suppliers and promise to provide better service.

Modified rebuy

In this buying situation, there is a modification to the specifications of the product or

specifications related to delivery. Executives apart from the purchasing department are
involved in the buying decisions. The company is looking for additional suppliers or is
ready to modify the approved vendors list based on the technical capabilities and
delivery capabilities.

New task buy

In this situation, the buyer is buying the product for the first time. As the cost of the
product or consumption value becomes higher, more number of executives are involved
in the process. The stages of awareness, interest, evaluation, trial, and adoption will be
there for the products of each potential supplier. Only the products which pass all the
stages will be on the approved list and price competition will follow subsequently.

Systems buy

Systems buying is a process in which the organization gives a single order to a single
organization for supplying a full system. The buying organization knows that no single
party is producing all the units in the system. But it wants the system seller to engineer
the system, procure the units from various vendors and assemble, fabricate or construct
the system.

Participants in the Business Buying Process

Buying Center Concept
Webster and Wind in the model they proposed to describe organizational buying
process, identified the organizational buying process as a team process and called the
team or the buying decision-making unit of the organization as buying center. The
buying center consists of all persons of the organizations who are involved in the buying
process playing one or the other seven roles: Initiators, Users, Influencers, Deciders,
Approvers, Buyers, and Gatekeepers.

Users

The persons who use the item. Say for safety gloves the operators.

Initiators

The persons who request the purchase. The safety officer may initiate the request for
the purchase.

Influencers

Persons who held define specifications. In this case of safety gloves, the safety officer
may himself define specifications. If an industrial engineer is in the organization, he may
also be consulted. There can a different gloves for different working situations and
industrial engineer may be more aware of specific requirements due to his special
nature of work - human effort engineering.

Buyers

They are the person who actually do the buying transaction.

Gatekeepers

They control access to personnel in a company. The receptionist, the secretaries etc.
Deciders

People who decide on product requireements and suppliers. It is the final approval for
product specfications and suppliers' list.

Approvers

Persons who approve the purchase. In the case of safety gloves, the personal manager
may have the power to approve.
Major Influences on Business Buyers
Environmental factors

Expected demand for the product that the buying organization is selling, expected
shortages for the item, expected changes in technology related to the item etc. are the
environmental factors that will have an effect.

Organizational factors

Changes in purchasing department organization like centralized purchasing,

decentralized purchasing and changes in purchasing practices like long-term contracts,
relationship purchasing, zero-based pricing, vendor-performance evaluation are the
organization factors of importance to marketers.

Interpersonal factors

These factors are the relationship between buyers and sales representatives of various
competitor companies.

Individual factors

These factors related to the buyer. What sort of ways of interacting and service are
appreciated by the buyers and what ways are considered as irritants? Marketers have
to understand the reactions of buyers.
Organizational Buying/Purchasing/Procurement Process
Steps in the Process

Problem recognition

General need description

Product specification
Supplier search

Proposal solicitation

Supplier selection

Order routine specification

Supplier performance review

 UNIT 3
MARKET STRATEGIES

 Value chain
 Customer strategy
 Pricing and related decisions
 Promotion and communication, decisions
 Customer relationship
Information Sheet-1 MARKET STRATEGIES

VALUE CHAIN
Exchange, Transactions, and Relationships Marketing occurs when people decide to
satisfy needs and wants through exchange. Exchange is the act of obtaining a desired
object from someone by offering something in return. Exchange is only one of many
ways that people can obtain a desired object. For Total quality management (TQM)
Programs designed to constantly improve the quality of products, services, and
marketing processes. The act of obtaining a desired object from someone by offering
something in return for example, hungry people could find food by hunting, fishing, or
gathering fruit. They could beg for food or take food from someone else. Or they could
offer money, another good, or a service in return for food. As a means of satisfying
needs, exchange has much in its favor. People do not have to prey on others or depend
on donations, nor must they possess the skills to produce every necessity for
themselves. They can concentrate on making things that they are good at making and
trade them for needed items made by others. Thus, exchange allows a society to
produce much more than it would with any alternative system. Whereas exchange is the
core concept of marketing, a transaction, in turn, is marketing‘s unit of measurement. A
transaction consists of a trade of values between two parties: One party gives X to
another party and gets Y in return. For example, you pay Sears $350 for a television
set. This is a classic monetary transaction, but not all transactions involve money. In a
barter transaction, you might trade your old refrigerator in return for a neighbor‘s
secondhand television set. In the broadest sense, the marketer tries to bring about a
response to some offer. The response may be more than simply buying or trading
goods and services. A political candidate, for instance, wants votes, a church wants
membership. The Japanese have long taken to heart lessons about winning through
total quality management (TQM). Their quest for quality paid off handsomely.
Consumers around the world flocked to buy high quality Japanese products, leaving
many American and European firms playing catch-up. Japan was the first country to
award a national quality prize, the Deming prize, named after the American statistician
who taught the importance of quality to postwar Japan. In recent years, however,
Western firms have closed the quality gap. Many have started their own quality
programs in an effort to compete both globally and at home with the Japanese. In the
mid-1980s, the United States established the Malcolm Baldrige National Quality Award,
which encourages U.S. firms to implement quality practices. Not wanting to be left out of
the quality race, Europe developed the European Quality Award in 1993. Thus, total
quality has become a truly global concern. Total quality stems from the following
premises about quality improvement:
1. Quality is in the eyes of the customer: Quality must begin with customer needs and
end with customer perceptions. As Motorola‘s vice-president of quality suggests,
―Beauty is in the eye of the beholder. If [a product] does not work the way that the user
needs it to work, the defect is as big to the user as if it doesn‘t work the way the
designer planned it.‖ Thus, the fundamental aim of today‘s quality movement has
become ―total customer satisfaction.‖

2. Quality must be reflected not just in the company‘s products but in every company
activity: Leonard A. Morgan of General Electric says, ―We are not just concerned with
the quality of the product, but with the quality of our advertising, service, product
literature, delivery, and after-sales support.‖

3. Quality requires total employee commitment: Quality can be delivered only by

companies in which all employees are committed to quality and motivated and trained to
deliver it. Successful companies remove the barriers between departments. Their
employees work as teams to carry out core business processes and to create desired
outcomes. Employees work to satisfy their internal customers as well as external
customers. Transaction A trade between two parties that involves at least two things of
value, agreed upon conditions, a time of agreement, and a place of agreement. Action
group wants idea acceptance. Marketing consists of actions taken to obtain a desired
response from a target audience toward some product, service, idea, or other object.
Transaction marketing is part of the larger idea of relationship marketing. Beyond
creating short-term transactions, marketers need to build long-term relationships with
valued customers, distributors, dealers, and suppliers. They want to build strong
economic and social ties by promising and consistently delivering high-quality products,
good service, and fair prices. Increasingly, marketing is shifting from trying to maximize
the profit on each individual transaction to building mutually beneficial relationships with
consumers and other parties. In fact, ultimately a company wants to build a unique
company asset called a marketing network. A marketing network consists of the
company and all its supporting stakeholders: customers, employees, suppliers,
distributors, retailers, ad agencies, and others with whom it has built mutually profitable
business relationships. Increasingly, competition is not between companies but rather
between whole networks, with the prize going to the company that has built the better
network. The operating principle is simple: Build a good network of relationships with
key stakeholders and profits will follow.

4. Quality requires high-quality partners: Quality can be delivered only by companies

whose marketing system partners also deliver quality. Therefore, a quality-driven
company must find and align itself with high-quality suppliers and distributors.

5. A quality program cannot save a poor product: The Pontiac Fiero launched a quality
program, but because the car didn‘t have a performance engine to support its
performance image, the quality program did not save the car. A quality program cannot
compensate for product deficiencies.

6. Quality can always be improved: The best companies believe in ―continuous

improvement of everything by everyone.‖ The best way to improve quality is to
benchmark the company‘s performance against the ―best-of-class‖ competitors or the
best performers in other industries, striving to equal or surpass them.

7. Quality improvement sometimes requires quantum leaps: Although the company

should strive for continuous quality improvement, it must at times seek a quantum
quality improvement. Companies can sometimes obtain small improvements by working
harder. But large improvements call for fresh solutions and for working smarter. For
example, Hewlett-Packard did not target a 10 percent reduction in defects; it targeted a
tenfold reduction and got it.

8. Quality does not cost more: Managers once argued that achieving more quality would
cost more and slow down production. But improving quality involves learning ways to do
things right the first time. Quality is not inspected in; it must be designed in. Doing things
right the first time reduces the costs of salvage, repair, and redesign, not to mention
losses in customer goodwill. Motorola claims that its quality drive has saved $9 billion in
manufacturing costs during the last eight years. And a recent study found that quality
programs usually pay off. Quality is necessary but may not be sufficient: Improving a
company‘s quality is absolutely necessary to meet the needs of more demanding
buyers. At the same time, higher quality may not ensure a winning advantage,
especially as all competitors increase their quality to more or less the same extent. For
example, Singapore Airlines enjoyed a reputation as the world‘s best airline. However,
competing airlines have attracted larger shares of passengers recently by narrowing the
perceived gap between their service quality and Singapore‘s service quality.

Relationship marketing: The process of creating, maintaining, and enhancing strong,

value-laden relationships with customers and other stakeholders. Relationship
marketing is oriented more toward the long term. The goal is to deliver long-term value
to customers, and the measures of success are long-term customer satisfaction and
retention. Beyond offering consistently high value and satisfaction, marketers can use a
number of specific marketing tools to develop stronger bonds with consumers. First, a
company might build value and satisfaction by adding financial benefits to the customer
relationship. For example, airlines offer frequent-flyer programs, hotels give room
upgrades to their frequent guests, and supermarkets give patronage refunds. A second
approach is to add social benefits as well as financial benefits. Here, the company
works to increase its social bonds with customers by learning individual customers‘
needs and wants and then personalizing its products and services. For example, Ritz-
Carlton Hotels employees treat customers as individuals, not as nameless, faceless
members of a mass market. Whenever possible, they refer to guests by name and give
each guest a warm welcome every day. They record specific guest preferences in the
company‘s customer database, which holds more than 500,000 individual customer
preferences, accessible by all hotels in the worldwide Ritz chain. A guest who requests
a foam pillow at the Ritz in Montreal will be delighted to find one waiting in the room
when he or she checks into the Atlanta Ritz months later. To build better relationships
with its customers, during the summer of 1994 Saturn invited all of its almost 700,000
owners to a ―Saturn Homecoming‖ at its manufacturing .To get to know them better,
Ford invites customers to brainstorming sessions. ―We talk about cars, sure. But we
often talk about non-car things: computers, the environment, and quality in very general
terms.‖ facility in Spring Hill, Tennessee. The two-day affair included family events, plant
tours, and physical challenge activities designed to build trust and a team spirit. Says
Saturn‘s manager of corporate communications, ―The Homecoming party is another
way of building... relationships, and it shows that we treat our customers differently than
any other car company.‖ More than 40,000 guests attended, coming from as far as
Alaska and Taiwan. A third approach to building customer relationships is to add
structural ties as well as financial and social benefits. For example, a business marketer
might supply customers with special equipment or computer linkages that help them
manage their orders, payroll, or inventory. FedEx, for instance, offers its FedEx Ship
program to thousands of its best corporate and individual customers to keep them from
defecting to competitors like UPS. The program provides free computer software that
allows customers to link with FedEx‘s computers. Customers can use the software to
arrange shipments and to check the status of their FedEx packages. For customers who
are connected to the Internet, FedEx offers these same services through its Web site.
Relationship marketing means that marketers must focus on managing their customers
as well as their products. At the same time, they don‘t want relationships with every
customer. In fact, there are undesirable customers for every company. The objective is
to determine which customers the company can serve most effectively relative to
competitors. In some cases, companies may even want to ―fire‖ customers that are too
unreasonable or that cost more to serve than they are worth. Ultimately, marketing is
the art of attracting and keeping profitable customers.
Understanding How Value is Created Within Organizations

A well-maintained chain helps business to run more smoothly.

How to change business inputs into business outputs in such a way that they have a
greater value than the original cost of creating those outputs?

This isn't just a dry question: it's a matter of fundamental importance to companies,
because it addresses the economic logic of why the organization exists in the first place.

Manufacturing companies create value by acquiring raw materials and using them to
produce something useful. Retailers bring together a range of products and present
them in a way that's convenient to customers, sometimes supported by services such
as fitting rooms or personal shopper advice. And insurance companies offer policies to
customers that are underwritten by larger re-insurance policies. Here, they're packaging
these larger policies in a customer-friendly way, and distributing them to a mass
audience.

The value that's created and captured by a company is the profit margin:

Value Created and Captured – Cost of Creating that Value = Margin

The more value an organization creates, the more profitable it is likely to be. And when
you provide more value to your customers, you build competitive advantage.

Understanding how your company creates value, and looking for ways to add more
value, are critical elements in developing a competitive strategy. Michael Porter
discussed this in his influential 1985 book "Competitive Advantage," in which he first
introduced the concept of the value chain.
A value chain is a set of activities that an organization carries out to create value for its
customers. Porter proposed a general-purpose value chain that companies can use to
examine all of their activities, and see how they're connected. The way in which value
chain activities are performed determines costs and affects profits, so this tool can help
you understand the sources of value for your organization.
Elements in Porter's Value Chain

Rather than looking at departments or accounting cost types, Porter's Value Chain
focuses on systems, and how inputs are changed into the outputs purchased by
consumers. Using this viewpoint, Porter described a chain of activities common to all
businesses, and he divided them into primary and support activities, as shown below.

Primary Activities

Primary activities relate directly to the physical creation, sale, maintenance and support
of a product or service. They consist of the following:

 Inbound logistics – These are all the processes related to receiving, storing, and
distributing inputs internally. Your supplier relationships are a key factor in creating
value here.
 Operations – These are the transformation activities that change inputs into outputs
that are sold to customers. Here, your operational systems create value.
 Outbound logistics – These activities deliver your product or service to your
customer. These are things like collection, storage, and distribution systems, and
they may be internal or external to your organization.
 Marketing and sales – These are the processes you use to persuade clients to
purchase from you instead of your competitors. The benefits you offer, and how well
you communicate them, are sources of value here.
 Service – These are the activities related to maintaining the value of your product or
service to your customers, once it's been purchased.
Support Activities

These activities support the primary functions above. In our diagram, the dotted lines
show that each support, or secondary, activity can play a role in each primary activity.
For example, procurement supports operations with certain activities, but it also
supports marketing and sales with other activities.

 Procurement (purchasing) – This is what the organization does to get the

resources it needs to operate. This includes finding vendors and negotiating best
prices.
 Human resource management – This is how well a company recruits, hires, trains,
motivates, rewards, and retains its workers. People are a significant source of value,
so businesses can create a clear advantage with good HR practices.
 Technological development – These activities relate to managing and processing
information, as well as protecting a company's knowledge base. Minimizing
information technology costs, staying current with technological advances, and
maintaining technical excellence are sources of value creation.
 Infrastructure – These are a company's support systems, and the functions that
allow it to maintain daily operations. Accounting, legal, administrative, and general
management are examples of necessary infrastructure that businesses can use to
their advantage.
Companies use these primary and support activities as "building blocks" to create a
valuable product or service.

Using Porter's Value Chain - To identify and understand your company's

value chain, follow these steps.

Step 1 – Identify sub activities for each primary activity

For each primary activity, determine which specific sub activities create value. There are
three different types of sub activities:

 Direct activities create value by themselves. For example, in a book publisher's

marketing and sales activity, direct sub activities include making sales calls to
bookstores, advertising, and selling online.
 Indirect activities allow direct activities to run smoothly. For the book publisher's
sales and marketing activity, indirect subactivities include managing the sales force
and keeping customer records.
 Quality assurance activities ensure that direct and indirect activities meet the
necessary standards. For the book publisher's sales and marketing activity, this
might include proofreading and editing advertisements.

Step 2 – Identify sub activities for each support activity.

For each of the Human Resource Management, Technology Development and

Procurement support activities, determine the sub activities that create value within
each primary activity. For example, consider how human resource management adds
value to inbound logistics, operations, outbound logistics, and so on. As in Step 1, look
for direct, indirect, and quality assurance sub activities.

Then identify the various value-creating sub activities in your company's infrastructure.
These will generally be cross-functional in nature, rather than specific to each primary
activity. Again, look for direct, indirect, and quality assurance activities.

Step 3 – Identify links

Find the connections between all of the value activities you've identified. This will take
time, but the links are key to increasing competitive advantage from the value chain
framework. For example, there's a link between developing the sales force (an HR
investment) and sales volumes. There's another link between order turnaround times,
and service phone calls from frustrated customers waiting for deliveries.

Step 4 – Look for opportunities to increase value

Review each of the subactivities and links that you've identified, and think about how
you can change or enhance it to maximize the value you offer to customers (customers
of support activities can internal as well as external).
Information Sheet-2 MARKET STRATEGIES

Both Amazon and Zappos are prime examples of brands that are customer centric and
have spent years creating a culture around the customer and their needs. Their
commitment in delivering customer value is genuine – In fact, Zappos is happy to fire
employees if they do not fit within their customer centric culture!
However, executing a customer-centric strategy doesn‘t happen overnight. You have to
start somewhere, and this blog post is intended to guide you in to achieving this.

What does it mean to be customer centric?

Customer centricity is not just about offering great customer service, it means offering a
great experience from the awareness stage, through the purchasing process and finally
through the post-purchase process. It‘s a strategy that‘s based on putting customer
first, and at the core of business.
 When you put your customer at the core of your business, you collect a wealth of data,
giving a full 360 view of the customer, which you can then use to enhance the customer
experience. For example:
 Customer data can be used to understand buying behavior, interests and engagement
 To identify opportunities to create products and services for best customers
 One can use customer lifetime value to segment customers based on top spending
customers
Not only does focusing on the customer make sound business sense, but research by
Deloitte and Touche found that customer-centric companies were 60% more profitable
compared to companies that were not focused on the customer.

The challenges of becoming a customer centric organization

The power shift between brand and customer happened during the economic downturn.
Customers – The winning brands were the ones who treated their customers with
respect, with great service, and built a relationship with them that still exists today.
And during the same time as the recession, social media exploded onto the scene and
mobile became a major part of the customer journey. Customers can now compare
products and services in real time and across multiple devices, which has presented a
huge challenge for many brands.
Research has found that companies are struggling with this change and are unable to
become a customer-centric organization – with the biggest challenge not being able to
share customer information across departments.
 Most companies do not have all of the components in place to claim they are customer
centric.

You need to start with your customers, not your products and focus on what your
customers want to do. By designing your company from the customer‘s perspective,
your organization will be focused on the customer‘s needs.

4 Best Practices to becoming a Customer Centric Company

By being customer centric, you will want to anticipate customers‘ needs and delight
them with products and services they may not have thought of, but will immediately fall
in love with (ie, Apple‘s iPhone or iPad). Thus, the customer centric brand creates
products, processes, policies and a culture that is designed to support customers with a
great experience as they are working towards their goals.
The four best practices that stand out regarding customer-centricity are:

1. Brands that are committed to customer centricity are passionate, and truly believe the
customer comes first. They believe that without the customer, they cannot succeed in
business (which is true) and want to see the world through the customer‘s eyes.
Marketers inside customer-centric organizations understand what customers want, and
use customer data to capture customer insights and share this across the organization.
2. Brands that are committed to customer centricity focus on what the customer wants and
needs, and develop products and services around that.
3. Brands that are committed to customer centricity focus on relationships designed to
maximize the customer‘s product and service experience.
4. Brands that are committed to customer centricity analyze, plan and implement a
carefully formulated customer strategy that focuses on creating and keeping profitable
and loyal customer.
 How to measure the success of a customer centric company?
Not every organization will have the same customer metrics to measure customer
centricity. However, the two most important customer centric metrics that should be
carefully monitored are churn rate and customer lifetime value.

Churn rate
Acquiring new customers is getting more difficult. Therefore, more companies are
investing in keeping existing customers instead of trying to find new ones:

 Acquiring new customers can cost up to 5x more than keeping existing customers
 A 2% increase in customer retention has the same effect on profits as cutting costs by
10%
 On average, companies lose approx. 10% of its customer base each year. Companies
with a high retention rate grow faster. The key to success is to understand why people
leave, and why people remain customers.
To calculate the churn rate, measure the number of customers who left in the last 12
months divided by the average number of total customers (during the same period).

Customer lifetime value (CLV)

For a customer-centric business, the most valuable asset is the customer. The profits
generated during the retention phase are often known as customer lifetime value or
CLV. Customer Lifetime Value (CLV) measures the profit your organization makes from
any given customer.

To calculate CLV, take the revenue you earn from a customer, subtract the money
spent on serving them and adjust all of the payments for time value of money. Another
way to calculate it is to take average order value and repeat purchase rates. For
example, if your average order value is $100 and the repeat purchase rate per customer
is 20% your estimated CLV is $125.

Calculating the customer lifetime value helps to understand why it makes sense to
invest in keeping customers. It‘s a great way to get an understanding of customer
portfolio and to segment customer
Information Sheet-3 PRICING AND RELATED DECISIONS

Pricing and related decisions

For most customers price by itself is not the key factor when a purchase is being
considered. This is because most customers compare the entire marketing offering and
do not simply make their purchase decision based solely on a product‘s price. In
essence when a purchase situation arises price is one of several variables customers
evaluate when they mentally assess a product‘s overall value.
Value refers to the perception of benefits received for what someone must give up.
Since price often reflects an important part of what someone gives up, a customer‘s
perceived value of a product will be affected by a marketer‘s pricing decision. Any easy
way to see this is to view value as a calculation:
Value = perceived benefits received
perceived price paid
For the buyer value of a product will change as perceived price paid and/or perceived
benefits received change. But the price paid in a transaction is not only financial it can
also involve other things that a buyer may be giving up. For example, in addition to
paying money a customer may have to spend time learning to use a product, pay to
have an old product removed, close down current operations while a product is installed
or incur other expenses. However, for the purpose of this tutorial we will limit our
discussion to how the marketer sets the financial price of a transaction.
An enormous number of factors affect pricing decisions. A marketing manager should
identify and study the relevant factors affecting the pricing. Some factors are internal to
organisation and, hence, controllable while other factors are external or environmental
and are uncontrollable.

Factors are also classified in terms of competition-related factors, market-related

factors, product- related factors, and so forth. However, we will consider internal and
external factors affecting pricing decisions. Due to these factors, price is set high or low,
fixed or variable, and equal or discriminative. Figure 2 shows a list of internal and
external factors. Let us analyze some of the main factors influencing pricing decisions.

(A) Internal Factors:

Internal factors are internal to organisation and, hence, are controllable. These factors
play vital role in pricing decisions. They are also known as organisational factors.
Manager, who is responsible to set price and formulae pricing policies and strategies, is
required to know adequately about these factors.

Important internal factors have been discussed here:

1. Top Level Management:
Top-level management has a full authority over the issues related to pricing. Marketing
manager‘s role is administrative. The philosophy of top-level management is reflected in
forms of pricing also. How does top management perceive the price?

How far is pricing considered as a tool for earning profits, and what is importance of
price for overall performance? In short, overall management philosophy and practice
have a direct impact on pricing decision. Price of the product may be high or low; may
be fixed or variable; or may be equal or discriminative depends on top-level
management.

2. Elements of Marketing Mix:

Price is one of the important elements of marketing mix. Therefore, it must be integrated
to other elements (promotion, product, and distribution) of marketing mix. So, pricing
decisions must be linked with these elements so as to consider the effect of price on
promotion, product and distribution, and effect of these three elements on price.

For example, high quality product should be sold at a high price. When a company
spends heavily on advertising, sales promotion, personal selling and publicity, the
selling costs will go up, and consequently, price of the product will be high. In the same
way, high distribution costs are also reflected in forms of high selling price.
3. Degree of Product Differentiation:
Product differentiation is an important guideline in pricing decisions. Product
differentiation can be defined as the degree to which company‘s product is perceived
different as against the products offered by the close competitors, or to what extent the
product is superior to that of competitors‘ in terms of competitive advantages. The
theory is, the higher the product differentiation, the more will be freedom to set the price,
and the higher the price will be.

4. Costs:
Costs and profits are two dominant factors having direct impact on selling price. Here,
costs include product development costs, production costs, and marketing costs. It is
very simple that costs and price have direct positive correlation. However, production
and marketing costs are more important in determining price.

5. Objectives of Company:
Company‘s objectives affect price of the product. Price is set in accordance with general
and marketing objectives. Pricing policies must the company‘s objectives. There are
many objectives, and price is set to achieve them.

6. Stages of Product Life Cycle:

Each stage of product life cycle needs different marketing strategies, including pricing
strategies. Pricing depends upon the stage in which company‘s product is passing
through. Price is kept high or low, allowances or discounts are allowed or not, etc.,
depend on the stage of product life cycle.

7. Product Quality:
Quality affects price level. Mostly, a high-quality-product is sold at a high price and vice
versa. Customers are also ready to pay high price for a quality product.

8. Brand Image and Reputation in Market:

Price doesn‘t include only costs and profits. Brand image and reputation of the company
are also added in the value of product. Generally, the company with reputed and
established brand charges high price for its products.

9. Category of Product:
Over and above costs, profits, brand image, objectives and other variables, the product
category must be considered. Product may be imitative, luxury, novel, perishable,
fashionable, consumable, durable, etc. Similarly, product may be reflective of status,
position, and prestige. Buyers pay price not only for the basic contents, but also for
psychological and social implications.

10. Market Share:

Market share is the desired proportion of sales a company wants to achieve from the
total sales in an industry. Market share may be absolute or relative. Relative market
share can be calculated with reference to close competitors. If company is not satisfied
with the current market share, price may be reduced, discounts may be offered, or
credit facility may be provided to attract more buyers.

(B) External Factors:

External factors are also known as environmental or uncontrollable factors. Compared
to internal factors, they are more powerful.

Pricing decisions should be taken after analyzing following external factors:

1. Demand for the Product:
Demand is the single most important factor affecting price of product and pricing
policies. Demand creation or demand management is the prime task of marketing
management. So, price is set at a level at which there is the desired impact on the
product demand. Company must set price according to purchase capacity of its buyers.

Here, there is reciprocal effect between demand and price, i.e., price affects demand
and demand affects price level. However, demand is more powerful than price. So,
marketer takes decision as per demand. Price is kept high when demand is high, and
price is kept low when demand of the product is low. Price is constantly adjusted to
create and/or maintain the expected level of demand.

2. Competition:
A marketer has to work in a competitive situation. To face competitors, defeat them, or
prevent their entry by effective marketing strategies is one of the basic objective
organisation. Therefore, pricing decision is taken accordingly.

A marketer formulates pricing policies and strategies to respond competitors, or,

sometimes, to misguide competitors. When all the marketing decisions are taken with
reference to competition, how can price be an exception?

Sometimes, a company follows a strong competitor‘s pricing policies assuming that the
leader is right. Price level, allowances, discount, credit facility, and other related
decisions are largely imitated.

3. Price of Raw Materials and other Inputs:

The price of raw materials and other inputs affect pricing decisions. Change in price of
needed inputs has direct positive effect on the price of finished product. For example, if
price of raw materials increases, company has to raise its selling price to offset
increased costs.

4. Buyers Behaviour:
It is essential to consider buyer behaviour while taking pricing decision. Marketer should
analyze consumer behaviour to set effective pricing policies. Consumer behaviour
includes the study of social, cultural, personal, and economic factors related to
consumers. The key characteristics of consumers provide a clue to set an appropriate
price for the product.
5. Government Rules and Restrictions:
A company cannot set its pricing policies against rules and regulations prescribed by
the governments. Governments have formulated at least 30 Acts to protect the interest
of customers. Out of them, certain Acts are directly related to pricing aspects. Marketing
manager must set pricing within limit of the legal framework to avoid unnecessary
interference from the outside. Adequate knowledge of these legal provisions is
considered to be very important for the manager.

6. Ethical Consideration or Codes of Conduct:

Ethics play a vital role in price determination. Ethics may be said as moral values or
ethical code that govern managerial actions. If a company wants to fulfill its social
obligations and when it believes to work within limits of the ethics prescribed, it always
charges reasonable price for its products. Moral values restrict managerial behaviour.

7. Seasonal Effect:
Certain products have seasonal demand. In peak season, demand is high; while in
slack season, demand reduces considerably. To balance the demand or to minimize the
seasonal-demand fluctuations, the company changes its price level and pricing policies.
For example, during a peak season, price may be kept high and vice versa. Discount,
credit sales, and price allowances are important issues related to seasonal factor.

8. Economic Condition:
This is an important factor affecting pricing decisions. Inflationary or deflationary
condition, depression, recovery or prosperity condition influences the demand to a great
extent. The overall health of economy has tremendous impact on price level and degree
of variation in price of the product. For example, price is kept high during inflationary
conditions. A manager should keep in mind the macro picture of economy while setting
price for the product.
Information Sheet-4 PROMOTION AND COMMUNICATION
DECISIONS

PROMOTION AND COMMUNICATION DECISIONS

Promotion is one of the key elements of the marketing mix, and deals with any one or
two-way communication that takes place with the consumer. This article concentrates is
a high level introduction to developing a promotional strategy for your business focusing
on advertising and other 'pull' tactics.

Developing a promotional strategy

Deciding on a marketing communications strategy is one of the primary roles of the
marketing manager and this process involves some key decisions about who the
customer is, how to contact them, and what the message should be. These questions
can be answered using a three stage process, which is equally relevant for all elements
of the marketing mix:
Segmentation -Dividing the marketing into distinct groups
Targeting -Deciding which of these groups to communicate with, and how to talk to
them
Positioning -How the product or brand should be perceived by the target groups
Messaging -Delivering a specific message in order to influence the target groups

1. Segmentation
Dividing potential customers into discrete groups is vital if you want to increase the
success rate of any communications message. If you don't know who you are talking to,
it's unlikely you will get much of a response. Who are the potential customers? How
many sub-groups should you divide them into? How do these groups differ? Hopefully,
most of this information will be readily available from market research.
What are their media consumption habits? What are their expectations and aspirations?
What are their priorities? How much disposable income do they have? What are their
buying habits? Are they likely to have children? How many holidays do they take a
year? How much money do they give to charity? How can you help them?
This information can be obtained in a variety of ways, from commissioning a specialist
market research agency, to examining sales patterns or social media interactions.
Commonly used market research methods include:

 Sales analysis and buying patterns

 Questionnaires
  Desk research
 Website statistics, especially social media
 Focus groups
 Face-to-face interviews
 Specialist market research companies

Once you have built up an accurate picture of your customer, it's time to get their
attention…

2. Targeting
For the purposes of advertising, targeting is the process of communicating with the right
segment(s) and ensuring the best possible response rate. The methods you use to
target your audience must relate to your marketing plan objectives - are you trying to
generate awareness of a new product, or attract business away from a competitor?

Methods of marketing communications

Advertising is just one element of the marketing communication arsenal, which can be
divided into the following areas:

Advertising – a mass media approach to promotion

 Outdoor
 Business directories
 Magazines / newspapers
 TV / cinema
 Radio
 Newsagent windows

Sales promotion - price / money related communications

 Coupons
 Discounts
 Competitions
 Loyalty incentives

Public relations - using the press to your advantage

 Press launches
 PR events
 Press releases
Personal selling – one to one communication with a potential buyer

 Salesmen
 Experiential marketing
 Dealer or showroom sales activities
 Exhibitions
 Trade shows

Direct marketing - taking the message directly to the consumer

 Mail order catalogues

 Bulk mail
 Personalised letters
 Email
 Telemarketing
 Point of sale displays
 Packaging design

Digital marketing – new channels are emerging constantly

 Company websites
 Social media applications such as Facebook or Twitter
 Blogging
 Mobile phone promotions using technology such as bluetooth
 YouTube
 E-commerce

Deciding which media channel to use

In nature, evolution occurs most rapidly when competition for resources is intense. The
same process is now occurring with promotional media. All traditional media channels
are now saturated, and competition for consumer attention is intense. At the same time,
the impact of any one medium is becoming diluted. There are many more TV and radio
channels, consumer have the ability to skip adverts and free information is now much
more accessible. As a result, companies are becoming increasingly innovative in their
approach to communications and a host of new media channels have emerged. As a
result, media choice is becoming a tricky task, which is why detailed segmentation is so
important - it's no use starting a Twitter campaign if none of your target market are
regular users of the site.
Highly targeted communications often lead to better results. One can usually expect a
response rate of under 1% for a relatively generic mass mailing. However, personal
letters to a handful of your most loyal customers would lead to a dramatically increased
rate of return. When deciding which media to use consider the reach, frequency, media
impact and what you can expect for your budget but most of all, ensure your target
customer will see the message in the first place. Media choice is a matter of
compromise between volume of people versus the personalisation of the message.

Ensuring message reflects the stages of the purchasing funnel

Once made the audience aware of brand, work doesn't stop there. The customer needs
to be guided through the purchasing process. This means identifying the key stages in
the customer journey and ensuring communications messages are personalised and
relevant.

Integrated marketing communications

Once decided which media channel to concentrate on, the next step is to ensure an
integrated approach is taken. Regardless of whether you are promoting a new product
or raising awareness, it's important that all ads across all media work together towards a
common goal by using similar messaging and 'look and feel'. An integrated approach
can dramatically increase the effectiveness of any campaign and will help create your
brand image.

Getting the best response

To get the best response from target market, need ensuring the message is relevant
and clear – once managed to gain the valuable attention of customer the last thing
want is for them to be confused about what you're saying. Determine the objectives of
the advert and ensure these aims are addressed clearly. Think about the next steps to
be taken, whether this is visiting a website, ringing a number, or being able to recall
your brand when they are next in the shops.

3. Positioning
Positioning is the process of developing an image for company or product. This can be
achieved partially through branding, but it's important to realise that all elements of the
marketing mix combine to provide the full picture. One must ensure that all areas of
business live up to expectations in order to successfully position yourself in the way of
hope. Positioning also considers the competition, and need to explain why brand is
unique in the marketplace and better than the other products on the shelf.

Branding and messaging

Branding is a powerful tool for positioning product. Branding is used on almost all
customer facing elements of a product, from the packaging design to the style of writing
used on posters. Every communication a customer received adds up to form a mental
picture of brand and can influence the price they are willing to pay for products. This
ability to charge more due to the positioning of your product is known as 'brand equity'.
Branding also needs to consider unique selling points (USPs) and ensure these are
easily recognized through messaging – is product the best value, longest lasting,
sweetest smelling or fastest?

Corporate identity

A corporate identity is a useful tool to ensure that branding is used in a consistent way
throughout the company. This detailed document runs through almost every
conceivable customer touch point and provides guidance on the presentation and style
which should be used. This could include use of logos, colours, tag lines, uniform and
the type of coffee to serve guests. A CI guide is particularly useful if any creative work it
outsourced to agencies or freelancers or if one have many offices worldwide. The most
powerful brands can be identified by many elements of their communications material,
not just a by their logo or slogan and this is due to successful implementation of a
recognizable corporate identity. Recognition is a key part of any purchase decision so a
corporate identity should for a core element of advertising strategy.

4. Development of the advertising message

Once determined the positioning for brand, it's time to develop the message in order to
influence target groups. Advertising objectives should be directly linked to marketing
plan, and tend to fit into the following generic categories:

 Inform - raising awareness of brand & products, establishing a competitive

advantage
 Persuade - generating an instant response (usually driving sales)
 Remind - to maintain interest and enthusiasm for a product or service

It's a documented fact that creative, well branded, distinctive advertising generates the
best results so ensure use the best possible creative team one can get hands on, and
give them a detailed brief. Remember that a message will only be successful if it
appeals to the target audience, so constantly refer back to the customer and tailor the
ads to them.
The nature of global promotion

Generally advertising is used primarily for low cost, mass volume consumer products.
Products like fertilizers, canned and fresh produce and tobacco - all products which are
used by end consumers - are the subject of heavy promotion. In intermediate products
like timber, leather and cotton the advertising may be more limited in nature due to the
fewer end purchasers of the raw material. Until recently, per capita GNP and advertising
were directly correlated, due to the more widespread availability of media and higher
incomes, giving a larger potential market for products. This is no longer the case.
Optimal levels of advertising occur where the advertising/sales overseas effect is equal
to the marginal advertising expenditure. The problem is in estimating the levels of each.
Global expenditure on advertising is believed to be more than US$ 200 billion, with the
US the largest spender and Japan next. Individual companies like General Motors and
IBM are each spending billions on advertising per annum. Worldwide, although less in
Africa, the average advertising expenditure as a percentage of GNP is around 1.4% The
major expenditure is on the television medic, the USA spending over US$ 30 billion on
this medium. In many African countries radio is widely used, especially where television
is not available, as in Malawi. Global programmes like CNN news and MNet television
have dramatically increased the global advertising and direct selling possibilities via
satellite. Print advertising continues to be a major medium in Africa.

Global promotion

When organisations advertise across international boundaries a number of important

factors have to be taken into consideration. Whilst the process is ostensibly
straightforward, (that is someone (seller) says something (message) to someone
(buyer) through a medium) the process is compounded by certain factors.

These mitigating factors can be called "noise" and have an effect on the decision to
"extend", "adapt" or "create" new messages.

Language differences may mean that straight translation is not enough when it comes
to message design. Advertising may also play different roles within developed, between
developed and underdeveloped and within underdeveloped countries. In developing
countries "education" and "information" may be paramount objectives. In developed
countries, the objectives may be more persuasive.

Cultural differences may account for the greatest challenge. However, many, notably
Elinder (1961)1 challenged the need to adapt messages and images, as he argued that
consumer differences between countries are diminishing. Changes may be needed only
in translation. However, this is only one point of view, as there is no doubt that cultural
differences do exist across the world. For example, it would be quite unacceptable to
have swimsuited ladies advertising sun care products in Moslem countries.

Three major difficulties occur in attempting to communicate internationally: the message

may not get through to the intended recipient, due to a lack of media knowledge; the
message may get through but not be understood, due to lack of audience
understanding and: the message may get through, be understood but not provoke
action. This may be due to lack of cultural understanding.

Media availability is a mitigating factor. Take for example, television. Whilst in Africa a
number of countries do have it, the extent of its use and time available may be limited.
Media use and availability, coupled with the type of message which may or may not be
used, is tied to government control. Government may ban types of advertising, as is the
case of cigarettes on British television. Intending advertisers should refer to the
appropriate codes of advertising practice available in each country.
Campaign design

Before embarking on a promotion campaign, the following questions, among many

others, must be answered. What can be said about the product? Which audience is
being reached? What resources does the organisation have? Can someone do it better,
say an agency?

Objectives

Advertising must only be undertaken for a specific purpose(s) and this purpose must be
translated into objectives. Whilst difficult to directly attribute to advertising, persuasive
advertising's ultimate objective is to obtain sales. Other objectives include building a
favourable image, information giving, stimulating distributors or building confidence in a
product. Whatever objective(s) are pursued, these must be related to the product life
cycle and the stage the product is in.

Budgets

Budgets can be set in a variety of ways. Many budgets use a percentage of past or
future sales, objective and task methods, or rule of thumb. "Scientific" methods include
sales response methods and linear programming.

Agency

Agencies can be used or not depending on the organisation's own abilities, confidence
in the market and market coverage. Many organisations, like Lintas and Interpublic, are
worldwide and offer a wide range of expertise.

Message selection

Message selection is probably where the most care has to be taken. Decisions hinge on
the standardisation or adaptation of message decision, language nuances and the
development of global segments and customers. Message design has three elements,
illustration, layout and copy. Advertising appeals should be consistent with tastes, wants
and attitudes in the market. Coke and Pepsi have found universal appeal. With the
"postmodern age" now affecting marketing, message design is becoming particularly
crucial. It is not just a question of selling, but of crafting images. It is often the image, not
the product, which is commercialised. Products do not project images, products fill the
images which the communication campaign projects. Coke's "Life" theme is a classic in
this regard.

In illustrations and artwork, some forms are universally understood. Coke, again, with its
"life" theme is applicable anywhere. Cheese and beer adverts would go well together in
Germany, but it would have to be cheese and wine in France.
Copy, or text, has been the subject of much debate. Effective translation requires good
technical knowledge of the original and translated language, the product and the
objectives of the original copy. Care has to be taken that the meaning does not get lost
in translation.

Media selection

There is a great difference in variety and availability of media across the world. The
choice of media depends on its cost, coverage, availability, character (national or local
or international) and its "atmosphere", for example in Zimbabwe posters versus adverts
in the Financial Gazette.

In advertising the choice is television, radio, press, magazines, cinema, posters, direct
mail, transport and video promotion. In promotion the choice is wide between money-off
offers, discounts, extra quantities, and so on. Other forms of promotion include
exhibitions, trade missions, public relations, selling, packaging, branding and sponsored
events. Governments can be a very powerful promotion source, both by providing
organisations like Horticultural Promotion Councils and by giving information and
finance. GATT/UNCTAD Geneva provides a promotional service, giving information
about products to interested parties. Trade Fairs are popular both as a "flag flyer", and
as a product display and competitive information gathering facility. There are over 600
trade fairs worldwide; These include the Hanover Fair, Germany, the Royal Agricultural
Show, UK for machinery and the Zimbabwe International Trade Fair for agricultural
produce and other things in general. The criterion for participating in fairs is always cost
versus effectiveness.

Campaign scheduling

Scheduling international campaigns is difficult, especially if handled alone rather than

with an agency or third party. Scheduling decisions involve decisions on when to break
the campaign, the use of media solely or in combination, and the specific dates and
times for advertisements to appear in the media.

Evaluation

Advertising campaign evaluation is not very easy at the best of times. Whilst it would be
nice to say that "X" sales had resulted from "Y" advertising inputs, too many intervening
factors make the simple tie-up difficult. Evaluation takes place at two levels - the
effectiveness of the message and the effectiveness of the media. Few African
developing countries, except Kenya, have any sophisticated methods for campaign
evaluation. Measures include message recall tests, diary completion, and brand recall.

Organisation and control

Whilst companies like Nestle may have centrally organised and controlled advertising
campaigns, many are devolved to local subsidiaries or agencies. The degree of
autonomy afforded to local subsidiaries depends on the philosophy of the organisation
and the relative knowledge of the local market by the principal.

Case 11.1 Zambezi Lager

One of Zimbabwe's successes in international marketing has been the launch of

Zambezi lager into the highly competitive U K lager markets. Through use of a UK
agency, clever and impressive message design, including scenes of the Victoria Falls,
and a premium pricing policy, the product has been established in a number of London
outlets. At a retail price of nearly £2 per bottle, this "designer" lager (incidentally sold in
a bottle) is nearly nine times the price it would sell on the local Zimbabwe market
Television advertising, coupled with retailer support, enabled Zambezi to be positioned
in a quality, clear beer segment. This example goes to prove that a quality "buying
proposal", through the use of a clever creative proposition, can be universally accepted.

Whilst truly global advertising, or even regional advertising, is a phenomenon not

normally associated with African countries, as time goes by it may be. Unfortunately few
countries see or use the overseas media to advantage. Fro developing countries, trade
missions can be very useful for promotion. This is a relatively cheap but effective
medium. Few countries activate their overseas embassies sufficiently to generate
possible trade. If, however, it is done, the foregoing sections have to be considered
carefully in order that possible mistakes are avoided.
Information Sheet-5 CUSTOMER RELATIONSHIP
MANAGEMENT

Customer relationship management

Building Profitable Customer Relationships Managing demand means managing

customers. A company‘s demand comes from two groups: new customers and repeat
customers. Traditional marketing theory and practice have focused on attracting new
customers and making the sale. Today, however, the emphasis is shifting. Beyond
designing strategies to attract new customers and create transactions with them,
companies now are going all out to retain current customers and build lasting customer
relationships. Why the new emphasis on keeping customers? In the past, companies
facing an expanding economy and rapidly growing markets could practice the ―leaky-
bucket‖ approach to marketing. Growing markets meant a plentiful supply of new
customers. Companies could keep filling the marketing bucket with new customers
without worrying about losing old customers through holes in the bottom of the bucket.
However, companies today are facing some new marketing realities. Changing
demographics, a slow growth economy, more sophisticated competitors, and
overcapacity in many industries— all of these factors mean that there are fewer new
customers to go around. Many companies now are fighting for shares of flat or fading
markets. Thus, the costs of attracting new customers are rising. In fact, it costs five
times as much to attract a new customer as it does to keep a current customer satisfied.
Companies are also realizing that losing a customer means more than losing a single
sale—it means losing the entire stream of purchases that the customer would make
over a lifetime of patronage. For example, the customer lifetime value of a Taco Bell
customer exceeds $12,000. For General Motors or Ford, the customer lifetime value of
a customer might well exceed $340,000. Thus, working to retain customers makes good
economic sense. A company can lose money on a specific transaction but still benefit
greatly from a long-term relationship. Attracting new customers remains an important
marketing management task. However, today‘s companies must also focus on retaining
current customers and building profitable, long-term relationships with them. The key to
customer retention is superior customer value and satisfaction. With this in mind, many
companies are going to extremes to keep their customers satisfied.
Self-Assessment 1 Written Test

Name: _________________________ Date: _______________

Directions: Answer all the questions listed below. Illustrations may be necessary to aid
some explanations/answers. (Total Marks: 25)

Test I: True or False: - (Marks: 10*1=5)

Fill in the blanks.

1. ___________ is the delivery of customer satisfaction at a profit.

2. Today, marketing must be understood not in the old sense of making a sale—―telling
and selling‖—but in the new sense of ___________.

3. The concept of ___________ is not limited to physical objects—anything capable of

satisfying a need can be called a ___________.

4. ___________ is the difference between the values the customer gains from owning
and using a product and the costs of obtaining the product.

5. Smart companies aim to ___________ customers by promising only what they can
deliver, then delivering more than they promise. Customer ___________ creates an
emotional affinity for a product or service, not just a rational preference, and this creates
high customer loyalty.

6. The fundamental aim of today‘s total quality movement has become ___________.

7. The goal of ___________ is to deliver long-term value to customers, and the

measures of success are long-term customer satisfaction and retention.

8. A ___________ is the set of actual and potential buyers of a product.

9. There are five alternative concepts under which organizations conduct their
marketing activities: They are the ___________, ___________, ___________,
___________, and ___________ concepts.

10. ―We make it happen for you,‖ ―To fly, to serve,‖ ―We‘re not satisfied until you are,‖
and ―Let us exceed your expectations‖ are all colorful illustrations of the ___________
concept.
Test II: Discussing the Issues

1. Answer the question, ―What is marketing?‖

2. Discuss the concept of customer value and its importance to successful marketing.
How are the concepts of customer value and relationship marketing linked?

3. Identify the single biggest difference between the marketing concept and the
production, product, and selling concepts. Discuss which concepts are easier to apply in
the short run. Which concept offers the best long-run success? Why?

4. According to economist Milton Friedman, ―Few trends could so thoroughly undermine

the very foundations of our free society as the acceptance by corporate officials of a
social responsibility other than to make as much money for their stockholders as
possible.‖ Do you agree or disagree with Friedman‘s statement? What are some of the
drawbacks of the societal marketing concept?

5. As indicated in the text, ―The explosive growth in computer, telecommunications, and

information technology has had a major impact on the way companies bring value to
their customers.‖ List and briefly explain five ways this trend has affected average
consumers and their purchasing habits. Be sure to include in your discussion the impact
of the Internet on marketing practices. *
Reference Books
Books on marketing : Kotler , Sheth & parvatiyar

PEDAGOGY:
Lectures/assignments/case studies/group discussion/workshop/role
playing/seminars/presentations.