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Marketing

Five concepts (20)

Production concept
Product concept
Selling concept
Marketing concept
Societal marketing concept

Definitions of MARKETING (6)


The performance of business activities that direct the flow of
goods and services from producer to consumer.
Getting the right goods , to the right people in the right place ,
at the right time , at the right price , with the right level of
communication profitably.
Identifying the needs, wants , desires of consumers and
fulfilling them in such a way that the customer is delighted
and the company objectives are met profitably.
Solving customer problems profitably.

STP

Segmentation: -- is essentially the identification of subsets of buyers


within market who share similar needs and who demonstrate similar
buyer behavior.The world is made up from billions of buyers with
their own sets of needs and behavior. Segmentation aims to match
groups of purchasers with the same set of needs and buyer
behaviors.
Targetting -- After the market has been separated into segments, the
marketer will select a segment or series of segments and target them.
Positioning: is the act of designing the companys offer and image so
that it occupies a distinct and valued place in the target customers
mind.

Requirements for effective segmentation(219)

Measurable : The size , purchasing power and profile of the


segments can be measured. Certain segmentation variables
are difficult to measure. E.g It is difficult to find the size of
segment of teenage smokers who smoke primarily to rebel
against their parents.
Accessible .: The segment can be effectively reached and
served. Suppose a perfume company finds that heavy users
of its brand are single women who are out late at night and
frequent bars . Unless these women live or shop at certain
places and are exposed certain media , they will be difficult
to reach.

Requirements for effective segmentation


Substantial : The segments are large and profitable enough to serve. A
segment should be the largest possible homogeneous group worth going
after with a tailored marketing program. e.g It would not be worthwhile
for an automobile manufacturer to develop cars for persons who are
shorter then 4 feet.
Differentiable : segments are conceptually distinguishable and respond
differently to different marketing mix elements and programs . If married
and unmarried women respond similarly to sale of fur coats , they dont
constitute separate segments.
Actionable : Effective programs can be formulated for attracting and
serving the segments. For e.g A small airline identified 7 market
segments but its staff was too small to develop separate marketing
programs for each segment

SEGMENTATION(206)

Segmentation Base
Geographic

Region
City Size

Climate

Psychographic

Lifestyle

Personality

Variables
North South, East, West
Major Metros, Sub Metros, Town
Hot, cold, humid

Conservative, Status Seekers


Extrovert, Introvert, Aggressive

SEGMENTATION
C) Demographic
Age
Sex
Family Size
Education
Occupation
Income
Religion

0-11,12-19,20-34 etc.
Male, Female
1-2,3-4,5+
school, Graduate, PG
Farmer, Professional,
Housewife, Retired
<15k,16-25k,26-35k etc.
Hindu, Muslim, Sikhs,
Christians

SEGMENTATION
D) Behavioral
Benefit

Use Related
1) Usage Rate:
2) Awareness Status
3) Brand Loyalty

Quality, Service, Economy, Speed,


Prestige.

Heavy, Medium , Light users


Unaware, aware, interested
enthusiastic.
Strong, Medium , None

Use-Situational
Time/Objective

Leisure, work, Morning, Night


Gift, Fun , Achievement

Patterns of target Market Selection(220)


Single Market Concentration
P1

P2

P2M1

P3
M1

M2

M3

Patterns of target Market Selection


Selective Specialisation
P1

P2

P2M1

P2M3
P3M2

P3
M1

M2

M3

Patterns of target Market Selection


Market Specialization
P1

P1M1

P2

P2M1

P3

P3M1
M1

M2

M3

Patterns of target Market Selection


Product Specialisation
P1

P2

P2M1

P2M2

P2M3

P3
M1

M2

M3

Patterns of target Market Selection


Full Coverage
P1

P2

P3
M1

M2

M3

Full Market Coverage


Undifferentiated Marketing -- Coca-cola
Differentiated Marketing-- IBM, G.M, Ford,

Positioning
Positioning starts with the product. But Positioning is not
what you do to a product. Positioning is what you do to the
mind of the prospect.
Easiest way to get into the mind - Be First
KODAK- Photography
Xerox -- Copier
Hertz --- Rent-a car

Positioning

6 STEPS IN POSITIONING PROGRAM


What position do you own
What position do you want to own?
Whom must you outgun
Do you have enough money.
Can you sustain .
Do you match your position.

PRODUCT ()
Defn: A product is anything that can be offered to a market for
attention, acquisition, use or consumption that might satisfy a want or
need.
e.g. :- Physical Goods :-- Cars, W/M
Services
:- Training
Persons
:- Michael Jackson
Ideas
: - Family Planning
Product classification - 310
Five Levels of Product - --- 308
Level 1 : Core Benefit : Fundamental benefit that the
customer is buying . E.g. :- Hotel :-Rest,
CTV :- Entertainment

Product
Level 2:- Generic Benefit : Basic version of the product.
e.g. : Hotel : consists of a building with rooms.
W/M : Metal/plastic body with console
panel
Level 3 : Expected Product : A set of attributes and
conditions that buyers normally expect and agree when
they purchase the product.
e.g. : Hotel : Clean Bed, soap, towels,
telephone
CTV : Tuning on remote, cable ready.

Product
Level 4 : Augmented Product : includes additional services and
benefits that distinguishes the companys offer from
competitors offers.
e.g. : Hotel : Complimentary breakfast, Flat CTV,
24 Hrs checkout, etc.
Level 5: Potential Product: All augmentations and
transformations that the product might ultimately undergo in
the future.
e.g. : Computer compatible TV (which can operate at room
temperatures)

Eight Stages of New Product Development

Idea Generation (561)


Idea Screening(566)
Concept Development & Testing(567)
Marketing Strategy(570)
Business Analysis-571
Product Development-572
Market Testing-573
Commercialization-576

Eight Stages
1) Idea Generation :
Source of New Product Ideas:Customers , Employees, Competitors Products and services ,
sales team
Idea Generating Techniques :
Brain Storming , Need/Problem Identification , Problem /Need
Identification

2) Idea Screening:
Drop Error
Go Error

3) Concept Development & Testing:


A product concept is an elaborated version of the idea expressed
in meaningful consumer terms.
4) Marketing Strategy Development :
a) Describes the size , structure of the target market,
Positioning, sales, Market share in the first few years.
b) Product, Price, Place, Distribution strategy.
c) Long run sales and profit goals.

5) Business Analysis:
Actual costs to R&D, MFG. ,Marketing cost and Profit Projection

6) Product Development:
1) Develop Prototype
2) Functional & Consumer Tests
7) Market Testing :
Testing in select outlets with actual brand name and
packaging

8) Commercialization :
When to enter the market
How to enter the market

Product width(320) : Different Product categories the company is


in
Product Length(322) : In each product category how many
products
are available
Product depth (): Variants that are offered for each product.

Product Strategies(325)
1) Downward Stretch
2) Upward Stretch
3) Two-way Stretch

BRANDING (251,259,271)
Products dont sell , Brands sell
The ultimate aim of product manager must be to
convert the product into a successful brand.
Japanese Name :

TOKYO TSHUSIN KOGYO


KABUSHIKI KAISHA
English name : Tokyo Telecommunications
Engineering company

BRANDING

CITIBANK : The citi never sleeps.


HSBC : The worlds local bank.
Canara Bank: Growing to serve. Serving to grow.
LOREAL: Because youre worth it.
Maybelline: May be shes born with it. May be its Maybelline.
GO GOA : 365 days on a holiday.
Kerala : Gods own country.
Retreat : city ends. Life begins.
KL : VISION CITY
Malaysia : Truly Asia.
Singapore : Singapore Roars
Hong Kong: Live it up.

BRANDING
BPL
: Believe in the best.
Videocon : Bring home the leader
Technology for health and Pleasure.
Sansui
:Better then the best
Born in Japan . Entertaining the world.
LG
:Digitally yours.
Nokia
:Connecting people
Motorola : Intelligence everywhere.
Ceat Tyres : Born Tough.
Femina
: For the woman of substance.
For generation W.

BRANDING

Orange : Wherever you go, our network follows.


Reliance India Mobile : Kar lo Duniya Mutthi Mein.
Aaj Tak : Sabse Tej.
Chevrolet optra : The new name for luxury.
Santro Xing : The sunshine car.
Tata Indigo: Spoil Yourself.
Mitsubishi Lancer: Always in control.
Raymond : For the complete man.
Tata Salt : Desh ka namak.
Louis Philippe: The upper crest.

BRANDING
Defn:- A name ,symbol, design which is intended to
identify the goods ,services of one company and to
differentiate the goods from those of competitors.
BRAND NAME DECISION

Individual Brand Name : P & G :- Ariel, Pantene


A Blanket Family Name : Philips
Company Name combined with individual product names:Britannia 50-50
Videocon Bazoomba

Selecting a Pricing method--382

Markup pricing : Add all costs and to that


add a standard markup (10-15%)
Target Return pricing : The price which gives
the company its target rate of return on
investment. (ROI) E.G -- If the cost per unit is
Rs1000. Invested capital is Rs100,00,000 and
expected sales is 50000 and ROI is 20% then
the price is= 1000+2000000/50000=Rs. 1040

Value Pricing : More for less concept


e.g
Walmart, Southwest airlines, Dell computers
Perceived value pricing == more for more
concept e.g Mercedes, Rolls Royc, Porsche
Going rate : charge as per competition . The
company doesn't look at its own cost --Follow the leader

PRICING Srategies
Differential Pricing : Same brand is sold at different
prices/different times to consumers.
Competitive Pricing : Prices are set to exploit competitive
position.
Product Line Pricing : Related brands are sold at prices
that
exploit mutual dependencies.
Promotional pricing :

Pricing
DIFFERENTIAL PRICING(392) :
1) Periodic Discounting : - Skimming Strategy
Cater to early adopters ----after that the price reduced to cater
to the next group of buyers.
e.g. : BPL MOBILE/ORANGE.
2) Second Market Discounting : Dumping --Firms selling
Price in foreign market is below its average cost in home
country. (e.g. dumping by china)

3) Customer segment pricing : different


customer groups are charged different
prices for the same product/service--concessions for students/ senior citizens for
rail and airfare
4) Time pricing : Prices vary by season , day
or hour

Pricing
B) COMPETITIVE PRICING :

1) Penetration Pricing : Price substantially below main


competitors. (AKAI, AMUL)
2) Geographic Pricing : In same country prices
different to
take advantage of sales tax/transportation savings.

Pricing

Product Line Pricing :


1) Complementary Pricing :
&

Captive Pricing : Razor & Blades, Cameras & Films , Auto


Spare Parts, VCD Player & Software.

Two Part Pricing : Service Industry :Fixed + variable usage fee (MTNL)
Entry fee + every ride /game/place
separate pricing :-- SENTOSA ISLAND (SINGAPORE)

2) PREMIUM PRICING : Basic & Deluxe Hotel


rooms,
Front & Tear
Auditorium seats, Basic & Deluxe cars:Firms make profit on Premium versions

Pricing
Product Line Pricing
3) Product Bundling : Season pass cheaper then daily tickets
Car + accessories , the price is lesser then
if each item is bought separately.
4) Image Pricing : Firms bring out an identical version of its
current product with a different
name/packaging and a
higher price. The
intention is to signal quality.

Promotional Pricing (391):


a) Loss leader
pricing : b) Off season special pricing:
c)
cash rebates: d) extras at same price -- e.g
insurance free with car purchased or 7 year
extended warranty for refrigerator at same
price
e) Special event pricing -- valentines
day, diwali etc.

Promotion mix or IMC(476)

Advertising
Sales Promotion
Personal Selling
PR and publicity
Direct marketing

Promotion
Advertising : is any paid form of non personal presentation and promotion
of ideas goods, services by an identified sponsor
Direct Marketing : Use of mail, telephone and other non personal contact
tools to communicate with or solicit a response from specific customers and
prospects.
Sales Promotion : Short term incentives to encourage trial or purchase of a
product/service
PR : A variety of programs designed to promote and protect a companys
image or its individual products.
Personal selling : Face to face interaction with one or more prospective
purchasers for the purpose of making sales.

In developing an advertising program , marketing managers


must always start by identifying the target market and buyer
motives .Then they can proceed to make the 5 major decisions
in developing an advertising program knows as 5Ms

Mission : What are the advertising objectives


Money : How much can be spend?
Message : What message should be send
Media : Which media to be used
Measurement : How should the results be evaluated

Sales Promotion
Consumer Promotion Tools:
Samples : Free samples with TOI , Mid-day, Filmfare.
Coupons: FMCG companies: 15% discount coupon or some
rupees off for the next purchase.
Price Packs: Pack of 2 or more at reduced price.
Banded Pack : Two related products banded together
(toothpaste with toothbrush, VCD player with software.)
Contests : Answer a few questions, write a slogan.
Free Trials: Free auto drives.
Warranties: 3 yr on CTV, 7 yrs on compressor.

Sales Promotion

Scratch n win offer:


Money back offer
Loyalty promotion: Frequent Flyer programs
Cross promotion: Two related product categories
promoting together , mostly the second product is free.
Tie-in promotion : used in conjunction with consumer
durables wherein total is lower then if bought separately.

Distribution
Retailing : Consists of the activities involved in selling
goods and services to ultimate consumers. A retail sale is
one in which the buyer is an ultimate consumer and the
buying motive for a retail sale is always personal or family
satisfaction derived from the final consumption of item
being purchased.
Wholesalers: Wholesaling is concerned with the activities
of those persons or establishments which sell to retailers
and other merchants , and/or to industrial , institutional and
commercial users , but who dont sell in significant amount
to ultimate consumers.

Distribution Strategies
EXCLUSIVE DISTRIBUTION : Distributing through
company outlets or franchisee e.g. : HONDA
Showrooms:- only company products are available.
INTENSIVE DISTRIBUTION : Placing the products in
as many outlets as possible.
Products : Soaps, cigarettes, soft drinks , BPL MOTS etc.
( each outlet has various brands

Distribution Strategies
SELECTIVE DISTRIBUTION :
Here companies select a combination of Exclusive
distribution (only companys products) & Intensive
Distribution (some important outlets which are multibrand
outlets)
e.g. SAMSUNG , VIDEOCON

Criteria for choosing Channel Partners


Financial Strength of Prospective Channel Partner : revenue,
P& L statement , balance sheet etc.
Sales Strength : no. of salesmen and their technical competency
Product Lines: 1) Competitive products, 2) Compatible
products 3) Complementary products.
Reputation : 1) leadership 2) Well Established 3) Level of
expertise.
Market coverage : Geographic coverage , outlets per market
area.
Sales Performance.

Criteria for choosing channel partners


Advertising & Sales promotion programs.
Ordering & Payment Procedures.
Willingness to share data : a) customers b) Inventory c)
sales figures.
Installation & Repair services .

Factors Retailers use in choosing companies

Accepts unsold or damaged merchandise returns


Has quick and easy ordering procedures
Provides prompt delivery
Maintains adequate supply
Good reputation /Brand Name
Has a large product range.
Provides deliveries in lots as desired by retailer.
Promotes brand on a regular basis.
Provides adequate margins.
Offers good schemes, quantity discounts
Extends credit > 30 days.
Has good competent sales team/product/technical team.
Ensures prompt service
Provides good store displays (POP)

Functions Performed by wholesalers/Retailers


for manufacturers.
Market coverage: Convenience to customers
Sales contact : company sales force would be calling on a
relatively small number of wholesalers/retailers rather then
the much larger number of customers.
Inventory Holding: Stock the products of the companies
that they represent.They reduce the manufacturers
financial burden and risk associated with holding large
inventories.
Market Information:
Customer Support : service, spare parts.

Functions Performed by wholesalers/Retailers


for Customers
Product Availability: ready availability of range of
products.
Assortment,convenience: Brings together from a variety of
manufacturers an assortment of products that can greatly
simplify the customers selection and ordering tasks.
Bulk-Breaking : Distributor buys in bulk and gives to
customers in unit of one : SKU.
Credit and Financial Assistance
Advice and Technical Support :(installation -->A/C,PC)
Customer Service : Delivery , after sales help .

External influences on consumer


External Influences

marketing
activities

culture

family
reference
groups

subculture

social
status

demographi
cs

Internal influences on consumer

Motives

Emotions

Learning

Personality
Perception

Consumer Buying decision


Making Process

Problem Recognition
Information Search
Alternative Evaluation & Selection
Store Choice
Post Purchase Behaviour/Processes