Meha Joshi Assistant Professor, Delhi School of Professional Studies and Research

€ Marketing

is creating and delivering standard of living -Paul Mazur Marketing is the management process that identifies, anticipates and satisfies customer requirements profitably· --The Chartered Institute of Marketing

€ ¶Marketing

is a social and managerial process by which individuals and groups obtain what they want and need through creating, offering and exchanging products of value with others· Kotler 1991

€ Who

are our existing / potential customers? € What are their current / future needs? € How can we satisfy these needs?

Can we offer a product/ service that the customer would value? Can we communicate with our customers? Can we deliver a competitive product of service?

€ Why

should customers buy from us?

Concepts in Marketing

States that Consumers will favor those € products that are widely available and low in cost € ‡ Produce as much as possible € ‡ Distribute widely € ‡ Example, Henry Ford·s early cars

He is credited with "Fordism". just price and availability € ‡ This gave way to the Product Concept . His intense commitment to systematically lowering costs resulted in many technical and business innovations. there were problems here. that is. including a franchise system ‡ However. Ford had a global vision. mass production of inexpensive goods coupled with high wages for workers. with consumerism as the key to peace. which were? € ‡ No focus on quality and features.

even in Asia € ‡ Bajaj missed the motorcycle revolution . what do you do? Make the ´bestµ possible product € ‡ Do R&D.Consumers will favour that product that offers the € best quality/performance and most features € ‡ Hence. improve and improve What are the problems here? Product Concept ² Myopia € ‡ Theodore Levitt called it ´Marketing Myopiaµ € ‡ Focus on the product. improve. rather than on the customer ‡ The rise of budget airlines. come out with new features.

consumer obsessed. in fact € Determine Who is the market leader in consumer electronics today here in this country? . at a profit € ‡ The Consumer is thus the starting point € ‡ Marketing starts with consumer needs € ‡ Hence. marketers have to be consumer focused always.Consumer Needs/Wants and fill them better than anyone else.

You need to care about society as well € ‡ Societal Marketing: Fill consumer needs. According to CSPI's letter. Texas. at the same time. harm him/her & society as little as possible ‡ Thus. € € . and the District of Columbia. Massachusetts. McDonald's toy promotions violate the laws of California. McDonalds faces lawsuits Center for Science in the Public Interest (CSPI) served McDonald's with a notice of its intent to sue if the fast food giant continues to use toys to promote Happy Meals. (An "intent to sue" letter is a prerequisite to filing a lawsuit in some states.) The basis for the potential case is that using toys to market to small children is unfair and deceptive under the consumer protection laws in a number of states. New Jersey.

They are also illegal. because young kids are not developmentally advanced enough to understand the persuasive intent of marketing. and (2) unfair to parents. . because marketing to children undermines parental authority and interferes with their ability to raise healthy children. because marketing to kids under eight is (1) inherently deceptive.€ The letter more specifically spells out the legal basis for the case: McDonald·s practices are predatory and wrong.

I try my best to educate my kids about healthy eating but it's hard when I am competing against the allure of a new Shrek toy. They market cheap toys that appeal to kids and it works. the last two concepts hold away .Parents· say McDonald's makes my job as a parent more difficult. currently. My kids always want to go to McDonald's because of the toys. ‡ Thus.

Ensuring arrival .where are we now? €Objectives .€Analysis/Audit .how do we get there? €(Implementation .which way is best? €Tactics .Getting there!) €Control .where do we want to be? €Strategies .

Marketing Environment .

€SWOT analysis €PEST analysis €Five forces analysis .

€Strengths (internal) €Weaknesses (internal) €Opportunities (external) €Threats (external) .

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Internal Environmental factors ‡ The set of factors inside the marketer·s value chain ‡ That can influence marketing success Employees ‡ Hire good people ‡ Empower them ‡ keep them happy otherwise how can they keep your customers happy ? Stockholders ‡ How can they influence you ? ‡ Mergers and acquisitions require support ‡ Institutional investors ‡ can buy and sell huge volumes ‡ shareholder value .

when times are hard .Partners ‡ McDonald·s franchisees ‡ Resellers and Distributors Suppliers ‡ crucial when there are lots of parts ‡ car industry ‡ JIT ‡ Few suppliers only (following Japanese) Customers ‡ Consumer Movement ‡ Thus. the importance of relationship marketing ‡ particularly.

€Political factors €Economic factors €Socio-cultural factors €Technological factors .

€ Monopolies legislation € Environmental protection laws € Taxation policy € Government policy € Legislation .

€Inflation €Employment €Disposable income €Business cycles €Energy availability and cost €Others? .

€ Demographics € Distribution of income € Social mobility € Lifestyle changes € Consumerism € Levels of education € Others? .

€New discoveries and innovations €Speed of technology transfer €Rates of obsolescence €Internet €Information technology €Others? .

4. Free Press.Five forces analysis Potential entrants Threat of entrants Bargaining power Substitutes Source: Adapted from M. 1980. Porter. E. p. Competitive Strategy. ¢ ¡ Suppliers   O P TITIVE RIVALRY Buyers Bargaining power Threat of substitutes .

Five Forces Analysis: Key Questions and Implications ‡ What are the key forces at work in the competitive environment? ‡ Are there underlying forces driving competitive forces? ‡ Will competitive forces change? ‡ What are the strengths and weaknesses of competitors in relation to the competitive forces? ‡ Can competitive strategy influence competitive forces (eg by building barriers to entry or reducing competitive rivalry)? .

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€ Seller is the centre of the business universe.Selling V/s Marketing € Selling starts with the seller & is preoccupied all the time with the needs of the seller. € Buyers is the centre of the business universe. € Emphasize on saleable surplus available with the corporation € Marketing starts with the buyer & focuses constantly on the needs of the buyers. . € Emphasizes on identification of a market opportunity.

€ Seeks to convert ¶customer· needs into ¶products·. € Traditional concept. € View business as a ´customer satisfying processµ. . € Cost determines the price. € View business as a ´good producing processµ. € Consumer determines price. € Customer is the first link.€ Seeks to quickly convert ¶product· into ¶cash·. € Modern concept. € Customer is the last link.

The Marketing Mix .

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Promotion. Process.The Marketing Mix The tools available to a business to gain the reaction it is seeking from its target market in relation to its marketing objectives 7Ps ² Price. Place. Product. Physical Environment Traditional 4Ps extended to encompass growth of service industry . People.

Price .

Price ‡Pricing Strategy ‡Importance of: -knowing the market -elasticity -keeping an eye on rivals ‡Pricing Strategy ‡ Importance of: -knowing the market -elasticity -keeping an eye on rivals .

Product .

etc.g.Product ‡ Methods used to improve/differentiate the product and increase sales or target sales more effectively to gain a competitive advantage e. . -Extension strategies -Specialised versions -New editions -Improvements ² real or otherwise! -Changed packaging -Technology.

Promotion .

Promotion Strategies to make the consumer aware of the existence of a product or service ‡ NOT just advertising .

Place .

the better for the business (and the consumer?) .Place ‡The means by which products and services is got from producer to consumer and where they can be accessed by the consumer -The more places to buy the product and the easier it is made to buy it.

People .

People ‡People represent the business -The image they present can be important -First contact often human ² what is the lasting -image they provide to the customer? -Extent of training and knowledge of the product/service concerned -Mission statement ² how relevant? -Do staff represent the desired culture of the business? .

Process .

Process ‡ How do people consume services? ‡ What processes do they have to go through to acquire the services? ‡ Where do they find the availability of the service? -Contact -Reminders -Registration -Subscription -Form filling -Degree of technology .

Physical Environment .

etc. ‡Marketing position ‡Product portfolio -Product lifecycle -Boston Matrix .Marketing Mix Marketing objectives ‡Type of product ‡Target market ‡Market structure ‡Rivals· behaviour ‡Global issues ² culture/religion.

Characteristics age € gender € geographic location € income € spending patterns € cultural background € demographics € marital status € education € language € mobility € .

It is too difficult to create a product that will satisfy everybody. that is why we focus on a segment of the total market .€ With a large country € Many different types of people .

Basis for Market Segmentation .

or inco e sychographic Social class. gender. states. lifestyle.Geographic Nations. regions or cities De ographic Age. fa ily size and life cycle. or personality Behavioral ccasions. uses. or responses . benefits.

€1

Segment marketing Eg. A car company may think that it will target low income group people 2 Niche marketing: Example: The cigarette manufacturer may have 2 niches ie:one who comprising of people who don·t care and other is the one who want to stop smoking

1. 2. 3.

Homogeneous preferences Diffused preferences Clustered preferences

€ The

process of evaluating segments and focusing marketing efforts on a country, region, or group of people that has significant potential to respond

Who buys our product? € Who does not buy it? € What need or function does it serve? € What are customers buying to satisfy the need for which our product is targeted? € What price are they paying? € When is the product purchased? € Where is it purchased? € Why is it purchased? € .

P2 YO M3 OR ANY OTHER COMBINATION € Product specialisation:p1 to M1. M2.€ Single segment concentration:p1 to m1 € Selective specialisation:P1 TO M1. M3 € Market specialisation:ALL P to 1 M € Full coverage .

€ Locating a brand in consumers· minds over and against competitors in terms of attributes and benefits that the brand does and does not offer ƒ ƒ ƒ ƒ Attribute or Benefit Quality and Price Use or User Competition .

especially for sightseeing) .€ Global ƒ ƒ consumer culture positioning Identifies the brand as a symbol of a particular global culture or segment Global teens. globe-trotters (To travel often and widely . cosmopolitan (common to the whole world) elites.

or product origins with a foreign country or culture € Local ƒ consumer culture positioning Associates the brand with local cultural milieu . use occasions.€ Foreign ƒ consumer culture positioning Associates the brand·s users.

This advt. by Max NY motivated parents to dream Big for their children & protect them by MAX NY· Children Plan Insurance. .

The TATA TEA ´JAGOO REµ Campaign was meant to change the lackadaisical attitude of people towards voting & elections and awaken them to use consciously their right to vote. .

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marketing strategies showed positive growth in sales.Launched in 1998. since its marketing strategies were unable to appeal its target audience. Parent Co TITAN € Pioneers in the youth watches segment € Initially targeted age group of 22-32 (Early Job seekers) € Started with commercials : ´cool watches from TITANµ € Initial years. € . € However by 2002-2003 the growth was stagnant.

25 years. mainly college going youngsters. Commercials like: ´How many you haveµ & their latest campaign ´Move nµ € . € € Target segment lowered down to 16. belts and other accessories.€ Fastrack thus re-launched itself in a new ´Avtaarµ in 2005 Launched more stylish. low priced watches € Diversified into eye gears.

THE MOVE ON COMMERCIAL FROM FASTRACK .

Marketing Strategies .

Typically there are four types of market dominance strategies: ƒ ƒ ƒ ƒ Leader Challenger Follower Nicher . firms are classified based on their market share or dominance of an industry.€ In this scheme.

ƒ ƒ ƒ Product differentiation Cost leadership Focus . The generic strategy framework (porter 1984) comprises two alternatives each with two alternative scopes. These are Differentiation and lowcost leadership each with a dimension of Focus-broad or narrow. Strategic scope refers to the market penetration while strategic strength refers to the firm·s sustainable competitive advantage.€ strategy on the dimensions of strategic scope and strategic strength.

€- This deals with the firm's rate of the new product development and business model innovation It asks whether the company is on the cutting edge of technology and business innovation. There are three types: ƒ ƒ ƒ Pioneers Close followers Late followers .

€- In this scheme we ask the question. but the most common gives four answers: ƒ ƒ ƒ Horizontal integration Vertical integration Diversification . There are a number of different ways of answering that question. ´How should the firm grow?µ.

Price Product Promotion Place 71 .

Anything received in an exchange to satisfy a need or want Goods Services Ideas People Places Organizations SIU 72 .

ƒ ƒ ƒ ƒ What is a product? What is not a product? What are the basic product concepts? Vocabulary? What are some of the basic tools marketers use to help them work with products? 73 .

social. and psychological utilities or benefits. a service. or an idea received in an exchange It can be tangible (a good) or intangible (a service or an idea) or a combination of both.ƒ ƒ ƒ A good. It can include functional. 74 .

or to make other products (raw materials and components) ƒ 75 .ƒ Consumer:--Products purchased to satisfy personal and family needs Business:--Products bought used in an organization·s operations. to resell.

and products that people do not necessarily think about buying 76 . minimal purchasing effort ƒ Shopping--buyers are willing to expend considerable effort in planning and making purchases ƒ Specialty--Items with unique characteristics that buyers are willing to expend considerable effort to obtain ƒ Unsought (impulse)--Products purchased to solve a sudden problem. frequently purchased items.ƒ Convenience³inexpensive. products of which the customers are unaware.

repair. handles) MRO Supplies--Maintenance. legal. and repair services) 77 . cleaning. consulting. and operating items that facilitate production and do not become part of the finished product Business Services--intangible products many organizations use in operations (e.g.ƒ ƒ ƒ ƒ ƒ ƒ ƒ Installations--Facilities and non-portable major equipment Accessory Equipment--used in production or office activities Raw Materials--Basic natural materials Component Parts--become part of a product Process Materials--not readily identifiable when used directly in the production of other products (e. screws.g. knobs.

g. everything Gillette sells) Product mix dimensions: ƒ ƒ ƒ Width --the number of product lines in the mix Depth --average number of product items in each product line 78 . Gillette Trac II razor) A Product Line is a group of closely related product items viewed as a unit because of marketing. all blades & razors) Product Mix is the total set of products a firm offers for sale to customers (e.ƒ A Product Item is a specific version of a product (e. technical. or end-use considerations (e.g.g.

FIGURE 10.1 79 .Source: Reprinted by permission of Proctor & Gamble.

ƒ ƒ ƒ ƒ ƒ ƒ ƒ Product·s value or features did not match customer needs Ineffective/inconsistent branding that fails to convey the right message or image to customers Technical or design problems Poor market timing Overestimation of market size Ineffective promotion Insufficient distribution 80 .

81 .

The entire package is sometimes referred to as the augmented product. . The mix of tangibles and intangibles in the augmented product varies from one product or service to another.Products are almost always combinations of the tangible and intangible.

. services mix and quality. and price appropriateness. Marketing mix planning begins with formulating an offering to meet target customers· needs or wants.€ Product is a key element in the market offering. € he customer will judge the offering by three basic elements : product features and quality.

the marketer needs to think through five levels of the product. ) € In . and the five constitute a customer value hierarchy.planning its market offering. € Each level adds more customer value. ( Contd«.

(1)Core Product / Core Benefit : The fundamental service or benefit that the customer is really buying. (2) Basic Product : At the same level. the marketer has to turn the core benefit into a basic product. . (3) Expected Product : A set of attributes and conditions buyers normally expect when they purchase this product.

«. competition takes place mostly at the expected product level ).. ( Contd. ( In less developed countries. .€ (4) Augmented Product : he marketer prepares an augmented product that exceeds customer expectations. € oday·s competition essentially takes place at the product-augmentation level.

( Augmented Product ) ‡ According to Levitt : he new competition is not between what companies produce in their factories. services. but between what they add to their factory output in the form of packaging. delivery arrangements. . warehousing. advertising. and other things that people value. financing. customer advice.

‡ Second. For gaining competitive advantage one will have to search for still other features and benefits.Some things should be noted about productaugmentation strategy : ‡ First. augmented benefits soon become expected benefits. each augmentation adds cost. he marketer has to ask whether customers will pay enough to cover the extra cost.( oday·s wow . tomorrow·s norm) .

. hus alongside the growth of fine products we see the emergence of lower-cost products for the clients who simply want the basic product. some competitors can offer a ´ Stripped-down µ version at a much lower price. as companies raise the price of their augmented product.( product-augmentation strategy ) € hird.

µ € .(5) Potential Product : encompasses all the possible augmentations and transformations the product might undergo in the future. € ( Successful Companies add benefits to their offering that not only satisfy customers but also surprise and delight them. Companies search for new ways to satisfy customers and distinguish their offer. ) ´ The best way to hold customers is to constantly figure out how to give them more for less.

reliability.The challenge before the product marketers is to create relevant and distinctive product differentiation. available from stores or orderable by phone. mail.. The product differentiation may be based on : ‡ Physical ifferences ( eg. durability. packaging ) ‡ Availability ifferences ( eg.. performance. internet ) . fax. style. design. features.

events. very low price ) € Price € Image ifferences ( eg.. very high price. media ) .. medium price. repair ) ifferences ( eg.€ Service ifferences ( eg. atmosphere. delivery.. low price. maintenance. training. consulting. symbols. installation.

€ Maintain the price and lose some market share and profits.Any successful differentiation will tend to draw imitators. The innovator faces three choices : € Lower the price to protect market share and accept lower profits. € Find a new basis to differentiate the product and maintain current price. .

TANGIBILITY AND USE (consumer or industrial ) (1) NON-DURABLE (2) DURABLE (3) SERVICES ( CONTD .ON THE BASIS OF PRODUCT CHARACTERISTICS :DURABILITY. ) .

.€ These are tangible goods normally consumed in one or few uses. Because these goods are consumed quickly and purchased frequently. the appropriate strategy is to make them available at many locations. charge only a small mark up and advertise heavily to induce trial and build preference.

and require more seller guarantees.€ These are tangible goods that normally survive many uses. Normally require more personal selling and service. . command a higher margin.

superior credibility.These are intangible. . variable and perishable products. inseperable. and adaptability. Normally require more quality control.

ON THE BASIS OF CUSTOMER SHOPPING HABITS : (1) CONVENIENCE GOODS (2) SHOPPING GOODS (3) SPECIALITY GOODS (4) UNSOUGHT GOODS .

immediately. (C) Emergency Goods: are purchased when a need is urgent. (B) Impulse Goods: are purchased without any planning or search efforts.‡ ‡ ‡ ‡ are goods that the customer usually purchases frequently. (A) Staples: Consumers purchase on a regular basis. and with a minimum of efforts. .

. quality. price and style. (B) Heterogeneous Shopping Goods: differ in product features and services that may be more important than price. in the process of selection and purchase.‡ ‡ ‡ are goods that the customer . characteristically compares on such basis as suitability. (A) Homogeneous Shopping Goods: are similar in quality but different enough in price to justify shopping comparisons.

€ are goods with unique characteristics or brand identification for which buyer is willing to make a special purchasing effort. .

These goods require advertising and personal selling support.€ are goods the consumer does not know about or does not normally think of buying. .

€ Calls € (1) € (2) € (3) € (4) for coordinated decisions on : Product Mix Product Line Individual Product Service Product .

€ A company·s product mix has a certain width.€A product mix (also called product assortment) is the set of all products and items that a particular seller offers for sale. € A total group of products that an organization markets. depth and consistency . length.

shampoos.€ The width of company·s (say HUL·s) product mix refers to how many different product lines the company carries. such as bathing soap. food products. . detergents. toothpaste.

. HUL has several product items like Lux. Thus in each of the product line HUL has a number of product items.. Lifebuoy. Pears. Liril. Eg. in the product line of bathing soaps.€ The length of a company·s product mix refers to the total number of items in its product mix.

Close up has a depth of nine (3x3). The average depth of HUL product mix can be calculated by averaging the number of variants within the brand groups. Thus if close up toothpaste comes in three formulations and in three sizes. .€ The depth of a company·s product mix refers to how many variants are offered of each product in the line.

. production requirements. HUL·s product lines are consistent in so far as they are consumer goods that go through the same distribution channels. distribution channels.€ The Consistency of the product mix refers to how closely related the various product lines are in end-use. or some other way.

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sales are zero.slowdown in sales growth. Increase outlay to compete .€ Product development . heavy expense of product introduction € Growth .rapid market acceptance and increasing profits € Maturity .profits do not exist. Profits level-off. investment costs are high € Introduction .

€ Decline .sales fall-off and profits drop .

Introduction Stage: € Skimming strategy :High Price € Penetration: High Promotion € € Growth Stage: It improves product qualityand ads new features to the product It adds new models It increases distribution coverage Shift from product awareness advertising to product preference advertising Lowers down the price to attract price sensitive buyers .

Entering new market segments € 3.€ Maturity Stage: € Market modification:1.Winning competitor·s customers € Product modification € 1. Converting non users into users € 2. Quality improvement and € 2. Feature improvements .

Sales promotion € 5.Personal Selling € 6.€ Marketing € 1.Distribution € 3.Price mix modification: € 2.Advertising € 4.Services .

Divesting the business quickly by disposing off its assets as advantageously as possible .Increasing the firm·s investment to dominate the market or to strengthen its competitive position € 2. Harvesting the investment to recover cash quickly € 4.€ Decline Stage € 1.Decreasing the firm·s investment level selectively by dropping unprofitable customer groups € 3.

Definition: The factor or consideration presented by a seller as the reason that one product or service is different from and better than that of the competition .

. It states that such campaigns made unique propositions to the customer and that this convinced them to switch brands.The Unique Selling Proposition (also Unique Selling Point) is a marketing concept that was first proposed as a theory to explain a pattern among successful advertising campaigns of the early 1940s. The term was invented by Rosser Reeves of Ted Bates & Company. Today the term is used in other fields or just casually to refer to any aspect of an object that differentiates it from similar objects.

Š Š Š Š Š Š Š Head & Shoulders: "You get rid of dandruff" Olay: "You get younger-looking skin" Some unique propositions that were pioneers when they were introduced: Domino's Pizza: "You get fresh. not in your hand" Wonder Bread: "Wonder Bread Helps Build Strong Bodies 12 Ways" . positively has to get there overnight" M&M's: "The milk chocolate melts in your mouth. hot pizza delivered to your door in 30 minutes or less -or it's free." FedEx: "When your package absolutely.

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