Basics of Marketing for Elective Students

By M Faisal (Lecturer) KASBIT

Compiled BY M Faisal
(KASBIT)
 MARKETING
Selling Versus Marketing: In short we can define selling as to
• The activities of a company sale your product(s) or service(s0 to the customers without
focusing on their needs and wants while defining marketing we
associated with buying and selling can elaborate it when company identify the needs and wants of
a product or service. It includes their target market and then manufacture or restructure their
advertising, selling and delivering products, processes etc
products to people.

• People who work in marketing

Selling Versus Marketing
departments of companies try to
get the attention of target
Production
audiences by using slogans, Capacities Manufacturing Aggressive
Aim at
Customer
Products Sales Efforts
packaging design, celebrity as a Target

endorsements and general media

exposure. The four 'Ps' of Actual
Production
Capabilities
Market
Wants/
marketing are product, place, Needs of Potential
Products/
Services
Potential Marketing
price and promotion. Customers Opportunities Marketing
Program

Compiled BY M Faisal Customer

(KASBIT)
5
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 (KASBIT)
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End User
Market
Marketing
Intermediaries
Environment

Environment
Company
Competitors
(Marketer)
Suppliers
Modern Marketing System
 Key Differences Between
Modern Marketing system and Simple Marketing System:

• Simple marketing system does not emphasize on effects which environment has produces
on the buying preferences of the customers.
 
• Simple Marketing Systems does not emphasize on the role of marketing intermediaries.
 
• Simple Marketing systems does not give any clue regarding the Push Strategies or Pull
Strategies.

• Moreover Simple marketing system also does not gives any idea regarding competition
(weather Direct competition or Indirect competition of the ciompany0 and effect of
competition on the marketing activities of the company.

• Simple Marketing system just gives idea regarding how marketers can communicate the
value of their products to the customer and how they can adopt the feedbacks for the
betterment of their products.
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 Who Purchases Products and Services?

Actual
Market - buyers Buyers
who share a
particular need
or want that can
be satisfied by a
company’s products Potential
or services. Buyers

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 Concept of Market Segmentation
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Definition
Market segmentation is the process of dividing
a potential market into distinct sub markets of
consumers with common needs and
characteristics.
Geographic

Behavioral Market
Segmentation Psychographic

Demographic
 The Market Segmentation Process

Stage I: Identify Segmentation Process.

Stage II: Develop Relevant Profile.

Stage III: Forecast Market Potential.

Stage IV: Forecast Market Share.

Stage V: Select Specific Segment.

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 Bases for Segmenting Consumer Markets

Geographic segmentation: Dividing the

market into different geographical units
such as nations, states, regions, cities or
neighborhoods

Demographic Segmentation: In this

segmentation the market is divided into
groups on the basis of variable such as
age, family size, family life-cycle, gender,
income, occupation, education, religion,
race, generation and. nationality.
 Using Geographic Segmentation

• Demand for some goods and services can vary according to the
geographic region

• Most major brands get 40-80 percent of their sales from what are called
CORE REGIONS

• Climate is another important segmentation factor

• Northern consumers, for example, eat more soup than Southerners

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 Using Demographic Segmentation

• Age and Life Cycle Stage

• Gender
• Income
• Education
• Profession/ Occupation
• Martial Status
• Family size
• Nationality

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 Using PsychoGraphic Segmentation
Psychographic Segmentation: In this segmentation, buyers are classified
into different groups on the basis of life-style or personality and values.
Some factors used for psychographic segmentation are:

1. Values
2. Attitudes
3. Life Styles
4. Personality
5. Social class

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 Using Behavioral Segmentation
Behavioral segmentation: Buyers are divided into groups on the
basis of their knowledge or attitude towards the use of, or
response to a product.
Some factors used for behavioral segmentation are
1. Occasions
2. Benefits
3. User status
4. Usage rate
5. Loyal status
6. Buyer readiness stage

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 DEFINING “TARGET MARKET”

A target market is the group of customers towards

which a company directs a set of marketing efforts.

In order to please these customers a marketer must use

the '4 P's of marketing': product, price, place
(Distribution) and promotion

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 Market Positioning

• Positioning is defined as the process

of designing the company’s products
and image to occupy a unique place
in the target market’s mind.

• Many marketers favor promoting

only one major benefit and Rosser
Reeves called it as “A unique Selling
Proposition”.

• Some unique selling propositions

(USPs) companies use are best
quality, best service, lowest price,
best value, safest, more advanced
technology, etc.
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 Company Orientations Toward the Marketplace

1) Target Market 2) Customer Needs

Stated needs: (Customer Wants an Inexpensive Car)

Real needs: (Then Customer Wants the Operating Cost of the Car Must
Also be low)

Unstated needs: (Expects Good Service from the Dealer)

Delight needs:

Secret needs: (Wants to be seen by friends as savvy consumer)

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 Demand States
Negative: Consumers dislike the Irregular: Consumers purchases vary on
product & may even pay a price to seasonal, monthly, weekly, daily or even hourly
avoid it. basis.

Nonexistent: Consumers may be Unwholesome: Consumers may be attracted to

unaware of or uninterested in the products that have undesirable social
product. consequences.

Latent: Consumers may share a strong Full: Consumers are adequately buying all
need that can not be satisfied by an products put into the marketplace. (Groceries)
existing product.
Overfull: More consumers would like to buy the
Declining: Consumers begin to buy the product than can be satisfied. (Electricity)
product less frequently or not at all.
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Marketing Management Philosophies
• Consumers favor products that are
Production Concept available and highly affordable
•Improve production and distribution

•Consumers favor products that offer

Product Concept the most quality, performance, and
innovative features
•Consumers will buy products only if
Selling Concept the company promotes/ sells these
product

•Focuses on needs/ wants of target

Marketing Concept markets & delivering satisfaction
better than competitors

•Focuses on needs/ wants of target

Societal Marketing Concept markets & delivering superior value
•Society’s well-being
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(KASBIT) Holistic Marketing Concepts
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Consumer Buying Behavior
Consumer Buying Behavior refers to the buying behavior of final
consumers (Individuals & Households) who buy goods and services for
personal consumption.

Study Consumer Behavior to Answer: How do consumers respond to

marketing efforts the company might use?
High Low
Involvement Involvement
Behavior Behavior
Significant Differences Buying
Between Brands
Seeking
Complex Variety-

Behavior Behavior
Few Differences Reducing Buying Buying
Between Brands Dissonance- Habitual
 Defining “BRAND”
• Brand Name, term, sign, symbol, design, or
some combination that identifies the products of
one firm while differentiating them from the
competition’s.

• Brands have a powerful influence on consumer

behavior and intended to identify the goods
and services of one seller or group of sellers
and to differentiate them from those of
competition.

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 Product Vs Brand
A product is something that is A brand is something that is bought by a
made in a factory customer.

A product can be copied by a A brand is unique.

competitor.

A product can be quickly outdated. A successful brand is timeless.

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 Elements of Branding
Brand Name
A,, or
Brand Name also called a product brand, is a word,
group of words, letters, or numbers that represent a
product or service.
A word, group of words, letters, or numbers that
represent a product or service; also known as a
product brand.

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 Elements of Branding
Trade name

A Trade name, or corporate brand, identifies and promotes a

company or a division of a particular corporation.

A phrase or symbol that identifies and promotes a company or a

division of a particular corporation; also known as a corporate brand.
A
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Elements of Branding
Trade Character

A Trade Character is brand mark that has human form or

characteristics.
 Elements of Branding
Brand Mark

A brand mark is a unique symbol, coloring, lettering, or

other design element. It is recognizable visually and does
not need to be pronounced

Elements of Branding
Trade Mark

A trademark is a word, name, symbol, device, or

combination of these elements that is given legal
protection by the federal government. Trademarks are
used to prevent other companies from using a similar
element that might be confused with the trademarked one.

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 Elements of Branding
Jingles

Jingles are musical messages written around the brand. Typically composed by
professional song-writers.
Jingles are perhaps most valuable in enhancing brand awareness.
In Pakistan Examples Includes State Life Insurance, Tallo Banaspati
etc

Elements of Branding
Slogans

Slogans are short phrases that communicate descriptive or persuasive

information about the brand. E.g. “Just do it”
In Pakistan “Tum He to Hoo” and “Yehi Hai Duhn sab ke”

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 Elements of Branding
Packaging

Packaging involves the activities of designing and producing containers or

wrappers for a product.
Objectives of packaging:
1. Identify the brand
2. Convey information
3. Facilitate product transportation and protection
4. Assist at home storage
5. Aid product consumption

Benefits of Packaging:
•Assist in product recognition.
•Packaging can create strong POD that permits a higher margin.
•Packaging changes can have immediate impact on sales.

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 Four Brand Strategies

Product Category

Existing New

Existing
Line Extension Brand Extension
Brand Name

New Brands
New
Multibrands

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 Exchange of 4 Es OF MARKETING

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 Defining Price

• The amount of money charged for a product or service

• The sum of all the values that consumers exchange for the
benefits of having or using the product or service

Examples of “Price”
Tuition, rent, fare, retainer, toll, salary/wage, dues

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 Definition of Price (Contd)

• Narrow Definition: The amount of money charged or

paid for a product or service.

• Broad Definition: The sum of all values consumers

exchange for the product or service.
Time Costs
Cognitive and Emotional Costs
Transaction Costs

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 Factors in Setting Price

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 Value-Based Pricing Vs Cost-Based Pricing

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THE PRICING EQUATION FOR CONSUMERS

PRICE = LIST PRICE - INCENTIVES & ALLOWANCES + EXTRA FEES

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 DEMAND ORIENTED APPROACHES

 Skimming Pricing
 Penetration Pricing
 Prestige Pricing Compiled BY M Faisal
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 Target Pricing
 Bundle Pricing

 Yield Management Pricing

 Price Strategies for New Products
Penetration Pricing

Skimming Pricing

Skimming  Penetration

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 COST ORIENTED APPROACHES

 Standard Markup Pricing

 Cost-Plus Pricing

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COMPETITION ORIENTED APPROACHES

 Customary Pricing

 Above-, At-, or Below-Market Pricing

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 Loss-Leader Pricing-

Lots of choices, but when to use which one?

 Types of Pricing
Psychological Pricing

A $2.19 B $1.99
32 oz. 26 oz.

Compiled BY M Faisal Types of Pricing

(KASBIT)
Break Even Pricing
BE= Fixed Costs/Contribution (SP-VC)
If Selling Price = $20, VC = $8
If Fixed costs are $2400 a day
BE (units) =$2400/$12 = 200 units
Need to sell 200 meals @ $20 to break-even
VC = 40%, Contribution Margin = (Sales - V.C) = 60% Cont Margin
BE Sales = $2400/0.6 = $4000
 Compiled BY M Faisal
(KASBIT)
Marketing Job
•Is not to create Need.

•Need is there. Marketing function is to offer a

specific product at a certain price and at a certain
place (where need is) and at the time when Need
is.

•If marketing function is performed properly, the

product is sold. Or else it would not sell, no
matter what?
 STRATEGIC MARKETING PLANNING

•Every marketing strategy is unique, but if we abstract from the

individualizing details, each can be reduced into a generic marketing
strategy. Strategies based on market Dominance –

•Typically there are four types of market dominance strategies:

•Market Leader
•Market Challenger
•Market Follower
•Market Nicher

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 Market Leader

The main options available to market leaders are:

Expand the total market by finding

• New users of the product
• New uses of the product
• More usage on each use occasion

Protect your existing market share by

• Developing new product ideas
• Improve customer service Compiled BY M Faisal
• Improve distribution effectiveness (KASBIT)
• Reduce costs

Expand your market share:

• By targeting one or more competitor
 Market Challenger

A market challenger is a firm in a strong, but not dominant position that is following an
aggressive strategy of trying to gain market share.

It typically targets the industry leader (For example, Pepsi targets Coke), but it could also
target smaller, more vulnerable competitors. The fundamental principles involved are:

Some of the options open to a market challenger are:

1. Price discounts or price cutting
2. Line extensions
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3. Introduce new products (KASBIT)
4. Reduce product quality
5. Increase product quality
6. Improve service
7. Change distribution
8. Cost reductions
9. Intensify promotional activity
 Market Follower

A market follower is a firm in a strong, but not dominant position that is content
to stay at that position.

The advantages of this strategy are:

1. No expensive R&D failures

2. No risk of bad business model
3. Able to capitalize on the promotional activities of the market leader
4. Minimal risk of competitive attacks
5. Don’t waste money in a head-on battle with the market leader

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 Market Nicher

•In this niche strategy the firm concentrates on a select few target markets. It is
also called a focus strategy.

•It is hoped that by focusing ones marketing efforts on one or two narrow market
segments and tailoring your marketing mix to these specialized markets, you can
better meet the needs of that target market.

•The niche should be large enough to be profitable, but small enough to be

ignored by the major industry players.

•Profit margins are emphasized rather than revenue or market share. The firm
typically looks to gain a competitive advantage through effectiveness rather than
efficiency. It is most suitable for relatively small firms

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 Market Nicher

The most successful Nichers tend to have the following characteristics:

1. They tend to be in high value added industries and are able to obtain high
margins.
2. They tend to be highly focused on a specific market segment
3. They tend to market high end products or services, and are able to use a
premium pricing strategy.
4. They tend to keep their operating expenses down by spending less on R&D,
advertising, and personal selling.

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