MS 204 Marketing Management

MBA II Semester

Dr. Vibhuti Tripathi

Quota System, production driven market

Liberalized Economy

Demand driven market; Informed and Demanding Customers

Focus on: Value Creation, Relationships, Retention, company and customer interface, integrated marketing programs

Defining Marketing

• Term ‘Market’ originates from Latin Word ‘Marcatus’, “Physical place where business is conducted”

• Has wider implications• Customers• Stake Holders• Business Partners• Competitors

• William J. stanton: A total system of interacting business activities designed to plan, promote and distribute want-satisfying products and services.

• American Marketing Association: The performance of business activities that direct the flow of goods and services through producers to consumers or users.

• Philip Kotler: A social and managerial process by which individuals and groups obtain what they need and want through creating, offering and exchanging products of value with others.

• “Marketing is a process by which companies create value for customers and build strong Customer Relationships in order to capture value from customers in return.”

Marketing:

Attempt is made to convert societal needs into profitable Opportunities. In the process activities involved create time,place and possession utilities. And a Value Proposition

Sales:

An activity which involves order taking and delivery of Products. In the process it builds goodwill, generates Demand and does problem solving

Advertising:

Paid form of non personal communication of goods / services

VALUE • A Ratio between what a customer gets and what he gives.

• Perceived tangible and intangible benefits offered by the products / services and its cost to the customers.

Customer Value Triad, QSP

Value

Quality (Product, Features, Ingredients, Service Components)

Service(After Sales, Embedded, Extra Efforts

Price(Low, Competitive)

Customers Reflects in the perceived tangible and intangible benefits offered by the product and its cost to

the customers.

Company Reflects in the cost of the product/ services and the revenue generated in the selling process.

Value = Benefits / Costs

Benefits: Functional + Emotional

Costs: Monetary + Time + Energy + Psychic

• Raise Benefits at same price• Reduce Cost at same benefits• Raise benefits reduce costs

Marketing is not only facilitating selling of a product but also creation of demand.

Needs: State of felt deprivation. Physical, Social and Individual Needs.

Physical: Basic to SurvivalSocial: Desire to BelongIndividual: Self Expression

Wants: Needs directed towards specific satisfiers.

Shaped by one’s cultural influence, individual personality and the society.

Demand: Wants + Purchasing Power.

Maslow’s Hierarchy of Needs

Physiological

Safety

Social

Esteem

SelfActualisation

McDonald’s Peter England

Canteen

Local Brand

Companies focus on wants and loose sight of needs and purchasing power

Radial Tyres Ply Tyres

Market Segmentation and Target Market

• Marketers can not satisfy everyone in the market. • Marketers start by dividing the market.

• Market Segment: consists of a group of customers who share a similar set of wants.

• Or fall into similar demographic, psychographic or behavioral patterns.

• Target Market: Lucrative for conducting business; resources and company objectives.

Marketing Process

1. Analyse and understand Markets and Prospective Customers’ needs and wants. (Market Segmentation, Target Marketing)

2. Design a customer driven marketing strategy with the goal of acquiring, retaining and growing target customers.

(Differentiation and Positioning; Marketing Mix)

3. Create a strategy delivering superior value.

4. Build profitable customer relationships and creating customer delight.

5. Reap the rewards.

• Differentiation: Developing unique differences with the intent to influence demand.

• Positioning: Tailoring a product's image and presentation to appeal to a selected market segment.

• Marketing Mix; includes a combination of tools like; Product, Packaging, Price, Channels of distribution,Advertising,Promotion and Personal selling

to pursue the marketing objective of the company and fulfilling needs and wants of the customers.

•

Tools of Marketing Mix

McCarthy classified the marketing mix tools into four broad categories; 4 Ps of Marketing

1. Product: Variety, Quality, Features, Packaging, Sizes, Warranty, Guarantee

2. Price: MRP, Discounts, Allowances, Payment Options, Credit Terms

3. Place: Channels, Coverage, Locations, Inventory,

Transportation

4. Promotion: Sales Promotion, Advertising, Public Relations

Robert Lauterborn suggested 4 Cs

4 Ps Correspond to the Customer’s 4 Cs

Product Customer SolutionPrice Customer CostPlace ConveniencePromotion Communication

7 Ps of Marketing Mix or Extended Marketing Mix

Coined by Booms and Bitner, more useful for services industry .

3 Additional Tools:

5. People: All people directly involved in the consumption of services. Consultant, Employees,

Management and Customers.

6. Process: Procedures, Mechanisms and Flow of Activities by which services are rendered and consumed.

7. Physical Evidence: Communication, Performance and Experience of existing customers.

Scope and Functions of Marketing

Functions of Research:

Marketing Research

Product Planning and Development

Functions of Exchange:

Buying and Assembling

Selling

Functions of Physical Treatment:

Standardization, Branding

Packaging

Storage and Transportation

Functions of Facilitating :

Salesmanship

Advertising

Pricing

Financing

Insurance

Company Orientations and Philosophy towards market place

Production Concept: Prevailed during Industrial Revolution

Assumptions:

Consumers will prefer products that are widely available and Inexpensive. and

Consumers are primarily interested in product availability and low prices.

Product Concept:

Assumption: Consumers will favour those products that offer the most quality, performance or innovative features .

Selling Concept:

Companies not only produce the product but also try to convince customers to buy them.

Assumptions:

If consumers are left alone they will ordinarily not buy enoughof Organization's products. and

Consumer typically show buying dis-interest or resistance and must be coaxed into buying.

Marketing Concept:

Matching a company’s capabilities with customer’s wants.

“Make –and-sell” to “Sense-and-respond”

Assumption:

Key to achieve its organisational goals consists of a company being more effective than competitors.

• Customer is the King.• You are the Boss.• Putting people first.

Marketing Concept contd.

Involves:

• Customer Orientation. • Integration and unification of company operations. Focus:

• Customer is important.

• Profit goals will be reached through satisfied customers.

Holistic Marketing Concept:

• Organizations keep in mind all the aspects of:

- Relationship Marketing: Building mutually satisfying long-term Building mutually satisfying long-term relationships.relationships.

- Integrated Marketing: all departments work together to serve the customers’ interest

- Internal Marketing: recruiting, motivating and retaining staff who want to serve customers well. - Social Responsibility: focus on delivering desired satisfaction effectively and efficiently that competitors, at same time

preserving consumers’ and society’s well being.

Analysing Marketing Environment:

Marketing Environment

External Internal - Company Image

- Location

Macro Micro - R&D Capability• Economic Conditions - Customers -Financial Capability• Political and Legal • Demographic - Intermediaries -Human Resource• Competition - Suppliers -Production Facilities • Technology

Economic Conditions:

• Business Cycle• Purchasing Power of Customers• Inflation • Interest Rates

Prosperity

Recession

Depression

Recovery

Business Cycle

Legal and Governmental Factors:

• Political Leadership

• Stability of Government

• Rules and Regulations

• Monetary and Fiscal Policies

• Patents, IPR, MRTP

Demographic and Socio-Cultural Factors:

• Age Structure (composition of population Age-wise)• Gender Distribution• Life Expectancy• Population Density• Household Size (Family Size)• Marital Status • Income and wealth distribution • Employment• Education• Occupation• Value System• Consumption Patterns and attitudes

• Changing Gender Roles:• Related to family • Jobs• Recreation• Buying Behaviour

• A Premium on Time: • Paucity of time• Attitude towards gaining more free time• Convenience

•Physical Fitness and Health;

Geographical Shift in Population;

Strategies: Product DevelopmentDistribution Arrangements

Pricing PoliciesPromotion

Competitive Environment:

Identify Competitive Advantage

1. What is the basis of present advantage?

2. Can these advantages be sustained?

Threat of New Entrants

Bargaining Power of BuyersThreat of Substitute

Bargaining Power of Suppliers

CompetitiveEnvironment

Technology:

• Technological breakthroughs can affect markets: • By starting new industries;

• By radically altering or virtually eliminating existing industries;

• By stimulating markets and industries not related to new technology;

• Accelerating pace of technological changes

Analysing External Micro- Environment:

• Customers: - Needs- Purchasing power- Buying Behaviour

• Suppliers: - Raw Materials / Finished Goods- Cooperative Relationships

• Intermediaries:- Value Creation; facilitating organisations- Channels of distribution

Analysing Internal Environment:

• Company Image; • Location; • Production Facility;

• R & D Capability; • Financial Resource; • Human Resource;

Analysing Consumer Markets and Buying Behaviour

• Every Marketing Activity starts and ends with consumers.

• Marketers Identify decision makers.

• It is important to know :

• who are the people that consume the product

• play a role in buying decisions

• why they take certain decisions

• when they buy

• where they buy

Customer’s Disposition

to Buy

Needs/ Wants Beliefs

Buying Without Wanting

Buying Without Deciding

Deciding Before Buying

Influencers on Consumers’ Buying Behaviour:

1. Cultural Factors; Culture, Sub-culture, Social Class

Culture: People’s shared customs, beliefs, values that are generated from generation to generation.

Sub-culture: smaller groups within cultural framework with common life experiences and situations.

Social Class: relatively homogeneous and enduring divisions in a society.

2. Social Factors; Reference Groups, Family, Roles and \ Status.

Reference Groups: Small Social Groups to which an individual belongs or aspires to belong.

• Membership Groups; Primary and Secondary

• Aspirational Groups

• Dissociative Groups

Opinion Leaders;

Family : Persons related by blood, marriage or adoption who reside together.

• Family is a major influencer on buying behaviour.

• Consumption Roles:

• Influencers;• Deciders;• Buyers;• Users;• Maintainers;

• Involvement and roles vary by products.

Stages in Family Life cycle:

1. Bachelor Stage

2. Newly Married Couples

3. Full Nest I

4. Full Nest II

5. Full Nest III

6. Empty Nest I

7. Empty Nest II

8. Solitary Survivor

• At each stage of Family Life Cycle a person behaves

differently; consumption patterns are also shaped up

accordingly.

Roles and Status:

A person enters and exists different roles and status throughout the life.

3. Personal Factors: Age and Life Cycle Stage, Occupation, Economic Situation, Lifestyle, Personality.

Age and Life Cycle Stage: Preferences to purchase goods and Render services vary over the life time.

Occupation: Occupation influences consumption patterns.

Economic Situation: Product Choice is greatly affected byeconomic circumstances like:

Spendable income (stability, time duration, level), savings, credit availability Personal IncomeFamily IncomeConsumer Credit

Lifestyle: a person’s pattern of living in the world reflected in activities, interests, opinions.

Personality: individual’s distinguishing psychological Characteristics;

self confidence, dominance, sociability, adaptability.

Brand Personality:

4. Psychological factors: Motivation, Perception, Learning and Beliefs and Attitude.

Motivation: is a drive, which propels a person towards achieving his goals.

A need becomes a motive when sufficiently backed with intensity

Why do People Shop?

Freud’s Theory: Psychological forces shaping up peoples’ behavior are largely unconscious and that a person can not fully understand his or her own motivation.

Some consumers resist prune (dried plum) because prunes are wrinkled looking and remind of old age.

Maslow’s Theory: People satisfy their most important needs first. The needs are placed in a hierarchical order.

Herzberg’s Two Factor Theory: Satisfiers and Dissatisfiers.

• The absence of dissatisfiers is not enough for a person to be motivated to purchase there must be presence of satisfiers to motivate a purchase.

• A marketer should avoid the presence of dissatisfiers and absence of satisfiers.

• Presence of a good packaging style would not act as satisfier or the motivation for purchase.

• At the same a shabby packaging may lead to dissatisfaction.

• Quality or the utility could be a satisfier

Perception: is the process by which an individual selects, organizes and interprets information inputs to create a meaningful picture.

Perceptions can vary widely among individuals exposed to same situation,

Three perceptual processes;

1. Selective Attention2. Selective Distortion3. Selective Retention

Learning: involves changes in an individual’s behavior arising from experience.

Learning is a continuous process,

Consumers can be made to learn the desired behaviour.

Beliefs and Attitudes: are developed by doing and learning.

• Marketers are interested in understanding beliefs that consumers have the product, and try to change negative beliefs.

Buying Decision Process

• When making a decision to buy a product from many competing products, a consumer unknowingly passes through a few stages of the decision process.

• Need Arousal is the first stage of a buying decision process.

• the consumer does not pass through all the stages before purchasing a product.

• The need for a given product is activated by internal and external stimuli.

Need/Want RecognitionDeciding there is, in fact, a need or a want to be filled.

Information SearchTrying to determine what's available.

EvaluationEliminating products/services/companies

and deciding who's best.

PurchaseActually buying your product/service

Post Purchase BehaviourRe-evaluate: Cognitive Dissonance

Personal, Commercial, Experimental

Stimuli: Internal

External

Evaluation of Alternatives

Purchase Intention

Attitudes of Others

Unanticipated situational Factors

Evaluation of Alternatives

Steps Between Evaluation and Purchase Decision

1. Intensity of Others Attitudes2. Motivation to comply

Purchase sub-decisions:

• Brand Decision • Vendor Decision

• Quantity Decision

• Timing Decision

• Payment Methods

Types of Buying Behaviours

• Consumers would demonstrate different buying behaviour based on;

InvolvementNature of Products

• Toothpaste / Brush / Soap etc.• Car / Bike • Apparels

• Complex and expensive purchases are likely to involve more buyer deliberation and more participants.

• Ones who know exactly what they want.

• Visitors who some what know what they want.

• The window shoppers,

• Non-Prospects

Different types of Buyers.

Complex Buying Behaviour

Variety Seeking Buying

Behaviour

Dissonance Reducing

Buying Behaviour

Habitual Buying Behaviour

Significant Differences Between Brands

Few Differences Between Brands

High Involvement Low Involvement

Types of Buying Behaviours

Complex Buying Behaviour: Highly self expressive products, Learning Process, infrequent purchases

Dissonance Reducing Buying Behaviour: anxiety or conflict of pre or post purchase decision.

Habitual Buying Behaviour: frequently purchased, Brand familiarity, no strong attitude towards a brand.

Variety Seeking Buying Behaviour: frequent brand switching, breaking the monotony.

Factors Likely to Increase Pre-Purchase Search

Product Factors:• Long inter-purchase time• Frequent changes in product styling• Frequent price changes• Volume Purchase• High Price• Many Alternatives• Much Variation in features

Situational Factors: • First Time Purchase• No Past Experience• Unsatisfactory past experience• Purchase for gift• Product is socially visible• Many sources of conflicting information

Socio Cultural Environment1. Family2. Informal Sources3. Non Commercial Sources4. Social Class, Culture

Firm’s Marketing Efforts1. Product2. Promotion3. Price4. Channels of Distribution

Psychological FieldMotivationPerceptionLearning, Personality

Experiences

Need Recognition

Pre Purchase Search

Evaluation of Alternatives

Post Purchase Evaluation

PurchaseTrialRepeat Purchase

INPUT

OUTPUT

PROCESS

New Product Adoption Process

Awareness

Interest

Evaluation

Trial

Adoption

Categories of Adopters

1. Innovators

2. Early Adopters

3. Early Majority

4. Late Majority

5. Laggards

1. Who is the target audience ?

2. What is the focus of the communication strategy ?

3. What bundle of attributes does the ad present for the consumers’ consideration?

4. What are the benefits associated with each attribute?

5. Suggest an alternative target segment and communication strategy.

Advertisement Evaluation

Business Buying Behaviour

Business/ Industrial Buying Behaviour

• Business market consist of all individuals and organisations

that buy goods and services for one or more purposes;

• The activity of marketing goods and services to business

users, rather than to ultimate consumers is Business-

Marketing.

• A firm performing the activity is a business marketer.

• Primary Distinction Usage not the Product

• Many transactions are required to produce and market a

product.

Leather Shoes

Cattle Hide Tanner

Shoe Manufacturer

End Consumer

Wholesaler / Distributor

Retailer

Metal Eyelets

Heels / Soles

ShoelacesPackaging

Nature of Business Market

– To make other goods and services;

manufacturing units

– To resell to other business users or to consumers;

Retailers, Used Cars

– To conduct the organisation’s operations;

office supplies, computer software

Components of Business Markets

1. Agriculture Market; Capital Investments in Farming are

increasing; Retail Fresh, ITC• Agribusiness – Contract Farming, Food

Processing• Farmers are looking at increasing their

productivity, cut their expenses, mobilising their cash flows.

2. Intermediary Market; buying from suppliers and reselling

these essentially in the same form.• Resellers create time, place, and information

utilities. • Retailers are also business buyers. • Team of Purchasers and Merchandisers

3. Government Market: Buying is based on competitive bidding• Protection for certain sections of entrepreneurs

• Information and guidelines are available from various agencies.

4. Services Market: marketing research, advertising, accounting, Legal consultancy etc.

5. Non-business Market: Non-profit organisations,

• Conduct marketing campaigns

Characteristics of Business Market Demand

1. Demand is derived from the demand for the consumer products.

Steel Automobiles / Refrigerators

2. Demand is relatively inelastic

3. Market is well informed

Determinants of Business Market Demand

1. Number of Buyers

2. Size of Business Users

3. Regional Concentration of Business Users

4. Number of Intermediaries

Business Buying Decision Process

Need Recognition

Identification of Alternatives

Evaluation

Purchase and Related decisions

Post purchase Behaviour

Buyer –Seller RelationshipSupply ChainLoyalty

Buying Practices

FrequencyOrder SizeNegotiationsServiceDependability

Types of Decisions

New TaskStraight RebuyModified Rebuy

Problem Recognition

General Need Description

Product Specification

Supplier Search

Proposal Solicitation

Supplier Selection

Order Specification

Performance Review

• New Task Buying:

• Most difficult and complex buying• Risk is high• Information needs are high• Little Experience with the product• Sellers too have a challenge to identify specific needs.

• Straight Re-buy: • Routine • Low-involvement• Minimal Information Required • No consideration for Alternatives

• Modified Re-buy:• Average involvement of time and people.

Buying Roles

• Users; people who actually use the product.

• Influencers; people who set the specifications and other aspects of buying decision.

• Deciders; people who make the actual buying decision.

• Gatekeepers; people who control the flow of purchasing information within the organisation and between the firm and potential vendors.

• Buyers; people who interact with the suppliers, arrange the terms, process the actual purchase orders.

Influencers on Business Buyer Behaviour

• Environmental Factors;

• Organisational Factors;

• Interpersonal Factors

• Individual Factors

Playing the Ponies, The Strategist, Business Standard, Tuesday, 8 January 2008

• Survey conducted to assess the launch of a Brand and Re-branding strategies.

• Parameters used– Visibility– Media Pressure– Sales/ Market Share – Likeability of advertisements– Parent Company– Promotional Activities– POP Displays– Performance of Similar Brands– Word of Mouth– Consumer insight-based strategy

• Three most successful brands;

BINGO, VODAFONE, AXIS BANK

• ITC Foods

• Looked for opportunity in packaged snacks category

• 16% Market share across the country

• Leveraging Synergies• Distribution Network• Sourcing From Farmers

• High Decibel Advertisement

• Market Survey to find out the snacking habits of Indian Consumers

• They were looking for excitement in snacks.

• Product Development; Chefs in ITC hotel were given the task

• Varied Falvours with twists; Chatkila Nimbu Achar, Bindas Masti Chaas,

• Target Group; Youngsters in 16-30 age groups

• They are more experimental

• Advertising Targeted at youth, based on disconnected humour

• ITC dominated media of every kind, with good creative along with good product.

• web site: www.bingeonbingo.com with offers, games, downloads and mobile games.

• On television 10 to 15 spots per channel per day, 20 spots on radio channels, 1000 outdoor hoardings.

• Huge brand recall would ensure repeat purchase.

• 4 lakh large racks to display the brand at all points of sale.

Dealing with Competition

Steps involved in Dealing with Competition

1. Identifying the Competitors

• Direct or Indirect Competitors

Soft Drinks

Market Leaders; 40% of the market

Market Challengers; 30%

Market Followers; 20%

Market Nichers; 10%

2. Analysing Competitors;

• Strategies; Product Line, Cost, Service Levels, Price • Objectives; Profitability, Market Share growth, technological leadership, service leadership,

• Expansion Plan

• Strengths and Weaknesses; gather information on each competitor.

• Share of Market; • Share of Mind• Share of Heart

3. Designing Competitive Strategies;

A. Market Leader Strategies;

• Expanding the Total Market, New Uses, More Usage, New Markets

• Defending Market Share• Position Defense • Flank Defense• Preemptive Defense• Counteroffensive Defense• Mobile Defense• Contraction Defense

• Expanding Market Share:

• Increase served target market• Increase Awareness• Product Innovation• Quality Enhancement• Line-Extension (increasing No. of Products under same brand) • Multi Brand (several brands in the same product category) • Heavy Advertising & Sales Promotion• Financing System• Full Line Strategy• Superior Service• Extensive and Efficient Dealership System

B. Market Challenger Strategies; • General Attack Strategies

• Frontal Attack • Flank Attack• Encirclement Attack• Bypass Attack

• Specific Attack Strategies • Price Discount• Lower Price Goods• Prestige Goods• Product Proliferation• Product Innovation• Distribution Innovation• Intensive Advertising & Promotion

C. Market Follower Strategies:

• Counterfeiter; duplicates• Cloner; slight variation• Imitator; • Adapter

D. Market Nicher Strategies:

• End-user specialist• Customer-size specialist• Specific-customer specialist• Geographic Specialist• Product or Product-line specialist• Service specialist• Channel specialist

Developing Marketing Strategies

Market Segmentation

• A company can not serve all customers in a category.

• Customers differ widely in terms of • Perception • Values• Preferences• Buying habits

• Potential Market;

• A company has different alternatives; according to their products or objectives.

Mass Marketing;

A company appeals to a broad range of consumers through a single basic marketing program.

• Companies consider large potential markets.

• Assumptions; 1. People have similar characteristics and wants for a

product category.

2. One Marketing Mix Strategy will satisfy them.

3. People do have different characteristics and wants but it is not worth to develop separate marketing mix.

• The elements of the marketing mix do not change for different consumers, all elements are developed for all consumers.

• Major objective is to maximize sales

• Single Marketing Mix Strategy consists of:

1 Pricing strategy 1 Promotional program aimed at everybody 1 Type of product with little/no variation 1 Distribution system aimed at entire market

Maruti 800 in 1980s, News Papers, Surf

• Pure Mass Marketing approach is dying rapidly.•Intense Competition•Much Aware Customer•Technological Up-gradations

•Process•Information

• Companies are turning to micro marketing by adopting different approaches based on Segmentation, Target Identification and Positioning.

• Market Segmentation: Process of identifying smaller groups of people that exist within a larger market.

• Market Segment : consists of a group of customers who share a similar set of wants, tastes and preferences.

A marketer does not create segment.

• Effective Segments are;

• Measurable;

• Accessible;

• Substantial;

• Actionable;

• Differentiable;

• The purpose is to design a Marketing Mix that more precisely matches the needs of individuals in a selected market segment.

• Approaches to build Market Segment:

• Homogeneous Demand- uniform, everyone demands the product for the same reason

• Diffused Demand- Product differentiation more costly and more difficult to communicate.

Cosmetic market, need to offer hundreds of shades of lipstick.

Firms try to modify consumer demand to develop clusters of at least a moderate size.

• Clustered Demand- consumer demand classified in 2 or more identifiable clusters.

Automobiles: luxury, cheap, Sporty, Spacious

Process of Market Segmentation

Analyse the needs of customers

Analyse the characteristics of consumers

Dis-integrate the viable, profitable, lucrative segments

Formulate different market mix for different segments

Feedback of various segments

Select the higher potential segments

Market Segmentation Strategies

Concentration Strategy:

A single market segment with one Marketing Mix.

Segment A

Segment B

Segment D

Segment C

Marketing Mix

Segment A

Segment B

Segment D

Segment C

Marketing Mix

Marketing Mix

Marketing Mix

Multi-segment strategy

2 or more segments are sought with a Marketing Mix for each segment, different marketing plan for each segment.

Bases for segmenting Markets.

• Two Broader groups of variables used by companies.

• Consumer Characteristics: Geographic, Demographic and Psychographic. • Different attitudes of professionals and workers for a product.

• Looking at customer responses to benefits, use occasion or brands. • May examine whether people who want

quality in buying a product differ in their geographic, demographic and psychographic makeup.

Major Segmentation Variables

• Geographic: Companies can operate in one or few geographic areas, or • operate in all areas with separate Marketing Mix Regionally.

• Cities, Regions • Retailers, Fast Food Chains, Tyres

• Demographic: most popular basis. Easier to measure. Age, Gender, Income, Family Size, Education, Occupation etc.

• Psychographic: refers to as lifestyle analysis.

• Behavioural: buyers are divided on the basis of their

knowledge attitude use response to a product.

Occasions: Life events, transitions, festivals

Benefits: people vary in the benefits they seek from the same product

User Status: non users, ex-users, potential users, first timeUsers

Usage Rate: light, medium and heavy usage.

Loyalty Status: Hard core, split, shifting, switchers.

Attractiveness of a Market Segment

• Size of the segment

• Growth Rate of the segment

• Competition in the segment

• Brand Loyalty of existing customers

• Required market share to break even

• Whether the company can offer superior value to the customers

• Impact of catering to the specific segment on companies image

• Access to distribution channels

Identifying Target Markets.

• A company can adopt alternative Targeting Strategies.

Alternative Strategies

Broad Coverage Narrow Coverage

Undifferentiated Marketing

Differentiated Marketing

Micro Marketing

Single Segment Concentration / Concentrated Strategy:

• Selecting a single segment and one marketing mix.

• Choice of Smaller companies with limited resources.

M1 M2 M3 M4

P1

P 2

P3

Selective Specialisation Strategy / Differentiated Strategy:

• Multiple segments catered.

• Different Marketing Mix to different segments.

• Product itself may or may not be different.

• Some of the Marketing Mix Tools may vary.

M1 M2 M3 M4

P1

P 2

P3

Product Specialisation:

• Company Specialising in a single product.

• Company builds up strong reputation.

M1 M2 M3 M4

P1

P 2

P3

Market Specialisation:

• Serving many needs of particular segment groups.

M1 M2 M3 M4

P1

P 2

P3

Full Market Coverage:

• A company attempts to serve the entire market,

• Single undifferentiated marketing strategy, or

• Separate marketing mix for each segment.

M1 M2 M3 M4

P1

P 2

P3

Benefits of Segmentation

Opportunity for rapid growth; specially for medium size companies

Opportunity for rapid growth

More focused; increases profitability

Helpful in formulating strategies

Minimising the risk of failure

Broadens the loyalty base of satisfied customers

Positioning

• Positioning: is the act of designing the company’s offering and image to occupy a distinctive place in the mind of the target market.

• End result of positioning is the successful creation of a customer Value Proposition.

• Product Positioning Vs. Brand Positioning.

Steps Involved in Positioning Task ?

Steps Involved in Positioning Task:

1. Identifying Competitive advantage

2. Choosing right competitive advantage

3. Selecting an overall Positioning Strategy

4. Developing a positioning statement

5. Communicating and delivering chosen positioning.

1. Identifying Competitive Advantage

a. Product; Features; Performance; Durability; Reliability; Reparability; Style; Design; Quality

b. Service; Delivery; After Sales Services; Customer Care; Installation;

c. People; Competence; Courtesy; Credibility; Responsiveness; Communication.

d. Image;

e. Channels; coverage, expertise, performance

2. Choosing right competitive advantage

• How many differences to choose?• USP Unique Selling Proposition • More differentiators; useful in intense competition

• Which differences to promote?

• Criteria to select differences; 1. Importance2. Distinctive3. Superior4. Communicable5. Preemptive6. Affordable7. Profitable

3. Selecting an overall strategy

Marginal Proposition

More

More

Same Less

Same

Less

Price

BenefitsLoosing

Proposition

LoosingProposition

LoosingProposition

4. Developing a Positioning Statement

Reflected in;

Need Recognition:

Target Segment:

Solution:

Concept:

Differentiation:

5. Communicating and delivering the chosen position

QUALITY COMPETITIVE VALUE

More

More

Same

Same

Less

Less

• Single Benefit Positioning: rare to find in intense competition

• Double Benefit Positioning: more distinctive

• Triple Benefits Positioning: challenging to communicate and convince; COUNTER SEGMENTED

Why Repositioning ?

1. Under Positioning: Vague idea about the brand.

Pepsi in Vanilla Flavour

2. Over Positioning: Narrow image of the brand.

Tanishque

3. Confused Positioning: Confused image in the mind of customers.

Maruti Versa and Maruti Omni VAN

4. Doubtful Positioning: hard to believe the brand claims.

Product

ProductA product is anything that might satisfy a want or need, whether it is a  

                                      

Goods

                                      

Service

                              Event

                                          

Person

                    Business or Organization

Experience Combination

The Good/Service Continuum

                                                                                                                        

Pure Tangible Goods

Tangible Goods with

accompanying Service

Hybrid

Offer

Services with accompanying Minor Goods

Pure Services

Soap

Automobile

With Repair

Services

Restaurant Airline Trip

With

Accompanying

Snacks

Financial

Consultant

Experience, a new dimension added to product and services

Levels of Goods and Services

                                                                                                                        

Goods and Services Classifications

CONSUMER PRODUCTS

INDUSTRIAL PRODUCTS

ORGANISATIONS PLACES AND IDEAS

. Consumer Products

2. Industrial Products

                                                      

. Consumer Products

2. Industrial Products

                                                      

Convenience Products

• Bought Frequently

• Low Priced

• Many Purchase Locations

• Includes: Staple goods

Impulse Goods

Emergency Goods

Shopping Products

• Bought Less Frequently

• Information Search

• Fewer Purchase Locations

• Compare for» Suitability» Quality» Price and» Style

Specialty Products

• Special Purchase Efforts

• Unique Characteristics

• Brand Identification

• Few Purchase Locations

Unsought Products

• New Innovations

• Products consumers don’t want to think about

• Require much advertising and personal selling.

Industrial Products

• Materials and Parts:

• Raw Material • Manufacture Material• Parts

• Supplies and services:

• Installations• Operating Supplies• Repair and maintenance items

Organizations, Places and Ideas

Space Selling

Event Marketing

Social Advertising

Concept Selling

Destination Selling

Developing a Product or Service Involves Defining The benefits it will offer:

Product Quality

Product Features

ProductStyle &Design

Ability to perform its core functions and levels & consistency

Differentiates the product fromCompetitors

Process of designing products style & design

Developing and Marketing a Product

Important Considerations

• Product Attributes:

• Branding:

• Packaging and Labeling:

• Product Support Services:

Packaging: involves designing and producing container or wrapper for a product.

Functions: Contain Safety ……………………….

Primary Container

Secondary

Container

Shipping Package

Main purposes to packaging:

• Utilitarian

• Implement Strategy

• To Increase Profit

Packaging is an important tool in Marketing Mix

                                                            

Steps in Developing a good package:

• Packaging Concept

• Develop specific elements of package

• Elements must support product’s position and marketing strategy.

Labels ???

Labeling :

• Printed information appearing on or with the package

• Performs certain functions:

• Identifies product or brand

• Describes several things about the product

• Promotes the product through attractive graphics

Product Support Services ???

Product Support Services

1. After Sales Services

2. Distribution

3. Customer Care

Marketer must periodically asses the;

• The value of current services to obtain new ideas

• The cost of providing the services

Customer Delight and Company Profits

Branding ???

Branding Strategy: Building Strong Brands

Brand: a name, term, sign, symbol or design OR a combination of all these.

• Intended to identify the goods or services of seller.

• Differentiate from competitors.

• Legal Protection for product

Classification of Brands

Individual Brands: •Separate brand names are used For different items by a single company•Attract various segments.•These brands have distinct images and appeals and marketed differently

Family / Blanket Brands :

•One brand name is used for two or more individual products.•Family branding is more effective for specialised companies• Positive fall out on other products.

Generic Brands : •Buyers refer the type of product they want by producers’ brand name. •Dangerous for the company.

Private Labels: •Retailers are creating their own brands.

Hindustan Unilever Limited

• Home and Personal Care Category:

Lux Dove Liril

Surf Excel Wheel Rin

Fair & Lovely Pond’s Vaseline

Sunsilk Clinic

Pepsodent Closeup

Axe Rexona

Lakme

Ayush

INDIVIDUAL BRANDS

Dabur India Limited :

Quality Ayurvedic and nature-based Health care, Personal Care, Food Products

Health Care: Chyawanprash, Glucose D, Hajmola, Pudin hara, Dabur Lal Tail, Shankh Pushpi etc.

Personal Care: Amla Hair Oil, Vatika hair oil, Vatika Face Pack, Dabur Lal Toothpaste and Dant Manjan, Babool, Meswak.

Food Products: Real Juices, Coolers, Homemade

FAMILY / BLANKET BRANDS

GENERIC BRANDS

DALDA, SURF, NIRMA, XEROX

PRIVATE LABELS

KORYA, Tasty Treat, Star and Sitara : BIG BAZAR

Life, Kashish and Vittorio Fratini : SHOPPER’S STOP

Brand Equity ???

Brand Equity

• In a market where products are similar, branding can have a large effect on the price that customers will pay.

• Brands add value to a basic product or service.

• Brand equity is an intangible asset that depends on associations made by the consumer.

• Negative Brand Equity:

Implications:

• Financial - One way to measure brand equity is to determine the price premium that a brand commands over a competitor.

• Facilitates a more predictable income stream.

• Increases cash flow by increasing market share, reducing promotional costs, and allowing premium pricing.

• Brand extensions - A successful brand can be used as a platform to launch related products.

• Leveraging of existing brand awareness

• Consumer-based - A strong brand increases the consumer attitude toward the product associated with the brand.

• Brand equity is an asset that can be sold or leased.

Building a Brand

Decisions Involved:

• Brand Positioning

• Brand Name

• Brand Sponsorship

• Brand Development

• Attribute Positioning : features

• Benefit Positioning: benefits

• Competitor Positioning: better than competitor

• Product Category Positioning: leader in certain product category

• Quality and Price Positioning: emphasizing quality or price

• Beliefs / Value Positioning:

Brand Name

• Good brand name leads to success of the product .

• suggestive

• easy to pronounce, recognize and recall

• distinctive

• could be translated easily in other languages

• capable of registration and legal protection

Distribution Method / Brand Sponsorship

1. Manufacturer’s Brand:

2. Private labels:

3. Licensing:

4. Co-branding:

Brand Development

• Four Options for developing a brand.

Line Extension

Brand Extension

Multi Brands

New Brands

Existing New

Existing

New

Product Categories

Brand

Line Extension: introducing additional items in a given product category under same brand name.

1. Low cost, low risk

2. Consumers desire for variety

3. use excess capacity

4. command more shelf space

Brand Extension: using successful brand name to introduce new or modified products in a new category.

1. Instant Recognition

2. Saves costs

Multi Brands: introducing new brands or additional brands in the same category.

1. Catering to different segments and motives

2. Each brand may obtain only a small market share none may be very profitable

3. Resources are spread up

New Brands: Company may create a new brand in a new product category.

Managing the Brand ??

Managing the Brand

1. Brand’s Positioning must be continuously communicated.

2. Developing Brand Experience (Managing the touch points)

3. Building a Brand asset Management Team

4. Re-orientation towards customer centric approach

5. Encouraging Intermediaries in Brand Building

6. Periodical Audit of Brand’s Strengths and Weaknesses

7. Re-branding if necessary

Product Line Decisions:

• The group of related company products that are similar in their target markets, pricing, and distribution channels

• Decisions Involve:

• Product Line Length:

• Line Stretching: going beyond current range

• Downward or upward Stretching can be done.

• Product Line Filling: adding more items within present range

Product Mix Dimensions:

Product Mix Width: Number of different product lines a company offers.

Product Mix Length: Total number of items a company carries within its product line.

Product Mix Depth: Number of versions offered in each product in line.

Product Mix Decisions

                                                                                                                                 

                                                   

Services Marketing

Nature and Characteristics of a Service

                                                                                                                                     

                 

Marketing Strategies for Service Firms

• The Service- profit chain consists of:

• Internal Service Quality

• Satisfied and productive service employees

• Greater service Value

• Satisfied and loyal customers

Types of Service Marketing

Internal MarketingTrain and Motivate Customer-Contact Employees

External Marketing All the rest of Marketing

Interactive Marketing

Quality of the Buyer-Seller Interaction

New Product Development

Need for New Product Development ??

Stages in New Product Development

1. Idea Generation

• For every 1000 ideas generated only 10% will have enough commercial viability.

• Major sources of New Product Development:

• Internal

• External

• Idea Management Systems are developed by companies.

2. Idea Screening

• Product development at later stage costs huge amount of money.

• Screening can be done on various parameters;

• Target market

• Competition

• Estimation of Market Size

• Price

• Development time and costs

• ROI

3. Concept Development and Testing

• Product Idea vs. Product Concept

• Product Concept could be

• A moderately priced product for family

• A medium priced product appealing to young generation

4.Marketing strategy development

5. Business Analysis

• Involves; review of sales, costs, and profit projections

• Satisfying company’s objectives.

6. Product Development

• Developing the product into a physical product

• Developing a prototype

• Tests for performance, safety, efficiency etc.

7. Test Marketing:

• Testing in real market

• It gives an experience

• Different approaches to test market a product

• Standard Test Market: small market, full marketing campaign

• Controlled Test Market: selected stores

• Simulated Test Market: simulated environment created for a sample.

8. Commercialisation

Product Life Cycle

• A product can not sell forever at the same levels

• Its sales volume and revenues generated follow a typical pattern

• The length of the life cycle, the duration of each phase can vary widely for different products.

Introduction Growth Maturity Decline

Product Sales

• Product Life cycle (PLC) can be useful framework for describing how products and markets work.

• Introduction Stage:

• Sales ---- Low• Profits --- Minimal or Negative• Investments ----- High • Product ------- Limited Models • Price ------ Premium / Competitive• Distribution Network ------ Selective / Scattered

• Intensive personal selling to retailers and wholesalers is required.

• Promotions ----- High Media Pressure, Repetitive• Focus ----- Early Adopters, Product Benefits, • Developing Product Awareness.

• Growth Stage:• Sales ---------• Profits -------------• Investments -----------• Promotions --------------------- • Focus ------------------

• Maturity Stage:

• Consider Modifying the markets, Products, Marketing Mix.

• Modifying The Market: • Increase consumption• New Users or Market Segments• Repositioning

• Modifying The Product: • Change characteristics of the product• improve performance• improve attractiveness

• Modifying the Marketing Mix:

• Decline Stage:

• Management may decide to Harvest the product .

• May Decide to drop the product

• May Sell the product to another company.

Some Dimensions of the Product Life Cycle

1. Length of the Product Life Cycle

• There is no exact time that a product takes to move through its life cycle

• consumer products usually have shorter life cycles than business products

• Rate of technological change shortens product life cycles.

2. Shape of the Product Lifecycle:

• Significant education of the customer is required.

• Extended introductory period.

                                                     

         

• Sales begin immediately

• Little learning is required by the consumer

• Benefits of purchase are readily understood.

                                                     

         

• Most often appear in apparels • Length of the cycles may be very long

• It could be repetitive

                                                     

         

• Rapid sales on introduction

• Equally rapid decline.

• Often novelties and have a short life cycle.

                                                     

         

A product diffuses, or spreads, through the population, a concept called the diffusion of innovation.

                                                                                                                                       

Innovators 2.5% •Eager to try new ideas and products •Have higher incomes

Early Adopters

13.5%•Much more reliant on group norms •Oriented to the local community •Tend to be opinion leaders.

Early Majority

34%•Collect more information •Evaluate more brands than early adopters. •Rely on friends, neighbors, and opinion leaders for information and norms.

LateMajority

34%

•Adopt because most of their friends have already done so. •For them, adoption is the result of pressure to conform. •Are older than the others

Laggards 16%

•Do not rely on the norms of the group.

•Independent because they are tradition-bound

•Are suspicious of new products

Common reasons for resisting a product in the introduction stage are

Usage barriers Product is incompatible with existing habits

Value barriers Product provides no incentive to change

Psychological barriers

Physical, economic, social or Image

Pricing

Pricing is an important strategic issue because it is related to product positioning.

It affects other marketing mix elements such as product features, channel decisions, and promotion.

Steps Involved in Setting up Pricing

Steps Involved In Fixing up Pricing Strategy

Develop marketing strategy

Make marketing mix decisions

Estimate the demand curve

Calculate cost

Understand environmental factors

Set pricing objectives

Determine pricing

Set Up Pricing Objectives

Set pricing objectives

Current profit maximization:

Current revenue maximization:

Quality leadership:

Partial cost recovery:

Survival:

Status quo:

Determining Pricing

Cost-plus pricing:

Break-even pricing:

Value-based pricing:

Psychological pricing:

Competition Based pricing:

Dynamic Pricing:

Pricing strategies: 

Product Line: Setting price steps between product line items.

Optional Product: Pricing optional or accessory products 

Captive Product: Pricing products that must be used with the main product 

By-Product: Pricing low value by product to get rid of them 

Product Bundle: Pricing bundles of products sold together 

Companies often adjust their basic prices according to various customer differences and situations.

Discount Pricing: Cash, Quantity, Functional, Seasonal

Segmented Pricing: Customer Segment, Location

Psychological Pricing:

Reference Pricing: Then and Now pricing cues

Promotional Pricing: special event pricing, zero-interest, free maintenance

Geographical Pricing: different prices for customers in different parts of the world

New Product Pricing

Penetration Pricing: Setting up low pricing

• New buyers are attracted, or existing buyers will buy more

• Lower costs per unit to achieve Economies

• To use up spare resources

• May also promote complimentary and captive products

Penetration Pricing Works when: 

• Market is highly price sensitive

• Production and distribution costs fall as sales volume increases

• Low price must help keep out the competition

Price Skimming: Setting up relatively higher price for a short time.

• “Skim” off customers who are willing to pay more to acquire the product sooner.

• Prices are lowered later when demand from the “early adopters” falls.

• High prices can be enjoyed in the short term where demand is relatively inelastic.

• A company can build a high-quality image for its product.

Skimming Pricing Works when: 

• Quality and image support the higher price

• Enough buyers want the product at that price

• Cost of producing a small volume cannot be high

• Competitors should not be able to enter the market easily

ECONOMY PENETRATION

SKIMMING PREMIUM

Quality

PRICE

Low High

Low

High

Initiating Price Changes

1. Price Cuts

2. Price Increase:

• Buyers Reaction to Price Change

• Competitor’s Reaction to Price Change

increase in Price can be done by :

• Revise the discount structure• Change the minimum order size• Charge for delivery and special services• Collect interest on overdue accounts• Produce less of the lower margin models in the

line• Change the physical characteristics of the

product• substitute cheaper materials

• Responding to Price Changes:

• Maintain Price:

• Maintain Price and Add Value:

• Reduce Price:

• Increase Price and Improve Quality:

• Launch a Low Price (fighter line):

Distribution

Distribution-activities that make products available to customers when and where they need them.

A channel of distribution or marketing channel is a group of individuals and organizations that directs the flow of productsfrom producers and customers.

Marketing Intermediaries link producers to other intermediaries or to the ultimate users of the product.

Operate between the producer and the final buyer.

Distribution

• Types of utility distribution offers

• TIME. • PLACE • POSSESSION

Value

Channel of Distribution for Consumer Products

Zero Level: Products are directly distributed to consumers Through showrooms.

One Level: Products are sold to consumers through retailers.

Two level: products are distributed through distributors / dealers and retailers

Three level: products are distributed through agents, distributors and retailers.

Producers of Consumers Goods

Ultimate Consumers

Channel of Distribution for Industrial Products

A variety of channels are available to reach organizations that will incorporate the products into their manufacturing processOr to use them in their operations.

Producers of Consumers Goods

Business Users

Factors Influencing the Channel Selection

Choosing a marketing channel is a decision that should bemade with care because of certain reasons:

1. If the marketing channel is not appropriately chosen it will be expensive

2. Poor channel selection would lead to ineffective presentation of the product, limited purchase opportunities by customers, poor customer service, loss of control.

Factors to be considered:

1. Number of customers and frequency of purchase

2. Cost of the product

3. Level of service required

4. Geographical concentration of the market

5. Degree of channel control desired

6. Financial position of the company

7. Propensity of risk

8. Services provided by middlemen

Market Coverage

Intensive Distribution: Maximum Market Coverage, used For convenience products or when customers are notWilling to spend much time on the products.

Selective Distribution: Moderate market coverage, used for Consumer shopping products

Exclusive Distribution: Restrictive coverage, used for Specialty products

Retailing and Wholesale

Retailing includes all activities involved in selling or renting consumer products directly to end consumers.

Functions of retailing:

1. Breaking the bulk into individual units

2. Creating time and place utility

3. Keeping variety of goods

4. Providing credit facility to customers

5. Provide Information to the customers and to manufacturers

6. Estimating demand and arranging purchase of the product

7. Connecting Link

Wholesalers different from Retailers:

1. Pay less attention to promotion, atmosphere, location, Customer services.

2. Covers Larger trade area

3. Transactions are larger

Functions of Wholesalers:

1. Anticipating customer needs

2. Information Dissemination

3. Communicating

4. Financing

5. Breaking Bulk

6. Transportation

7. Storage

8. Risk Taking

Retail Market in India

Unorganized Fragmented

Experimentation with formats Store design

Unorganized retailing is getting organized

Consumption Boom:

Favorable Demographics,

Rise in income Level,

Double Income Families,

Rising Aspirations,

Shifting Consumption Patterns

Organised Retailing

• leveraging technology

• adherence to corporate laws

• effective inventory management

• sales forecast

• high investment

• skilled manpower

• conducive environment

Unorganised Retailing

• Un- managed inventories

• low cost of operations

• individually owned/managed

• less focus on technology usage

• minor overheads

• low taxes

• unskilled manpower

Characteristics of Organised and Unorganised Retailing

Classification

Organised Retailing Unorganised Retailing

1. Ownership Based• Franchisee• Independent Retailer• Co-operatives

2. Merchandise on Offer• Food Retailers• General Merchandisers• Combination

3. Store Based • Department Store• Hyper Market• Specialty Stores• Malls

4. Non Store Based • Vending Machines• Web Portals

Semi organised Retailing

Marketing Communication Mix

Consists of five modes of communication.

Advertising: Any paid form of non personal presentation andPromotion of ideas, goods or services by an identified Sponsor.

Sales Promotion: A variety of short term incentives to Encourage trial or purchase of a product or service.

Public Relations and Publicity: A variety of programs designed to promote or protect a company’s image or itsindividual product or change the attitude of customers.

Personal Selling: Face-to-face interaction with one or moreprospective customers for the purpose of making presentations, answering questions and procuring orders.

Direct Marketing: Use of mail, telephone, fax, e-mail or internet to communicate directly with the customers

• Encoding - Translating Thoughts Into Symbolic Form

• Message - Common Experience

• Decoding and Receiving- Selective Attention

- Selective Distortion (Amplification & Leveling)

- Selective RecallLong Term Memory (Rehearsal & Positive

Attitude)

- Short Term Memory

• Response (Attitudes) are influenced by the following factors Monopoly on Attention, In Line With Existing Opinion,

Reference Group Approval,

Source Credibility: Expertise, High Status, Objectivity, Likability, Power

Steps in Developing Promotional Plan

1. Identify Target Audience 2. Determine The Communication Objective

3. Design The Message

4. Decide on The Promotional Mix

5. Allocate The Promotional Budget

6. Measure The Results

7. Manage And Coordinate The Process

1. Identify Target Audience

• Potential new buyers

• Current users

• Influencers– People who may not buy but influence decisions of those who may purchase

2. Set the Objectives

3. Design the Message

• What To Say (Message Content)- Appeal (Rational, Emotional, Moral), Theme, Idea

• How To Say It Logically (Message Structure)- Conclusion Drawing, One vs. Two Sided Messages

• How To Say It Symbolically (Message Format)-Print (Color, Headline, Illustration, Demonstration, Testimonial,Payoff, Image); Radio (Voice, Vocalization, Script); TV (All above)

• Who Should Say It?- Source Credibility

Step 4 - Decide On Promotional Mix

• Advertising

• Sales

• Sales Promotion

• Publicity and Public Relations

5. Set the Budget

• Affordable method: Budget what is thought affordable

• Percentage of sales method

• Competitive parity method

• Objective and task method: Define specific objectives, Determine tasks necessary to achieve objectives, Estimate costs of performing these tasks

6. Measure the Results

• Attitude and awareness objectives; Pre- promotion level vs. post-promotion level

• Behavioral objectives

Changes in sales Test markets

Marketing of Services

Services are intangible products, exchanged directly from producer to the user, can not be transported or stored and are almost instantly perishable.

Service products are often difficult to identify as they come Into existence at the same time they are bought and consumed

They are composed of intangible elements that are inseparable, Can not be sold in the sense of ownership transfer.

Characteristics of Services:

Services are perishable

Buyers are involved in in the development and distribution ofServices.

Services are intangible

Service’s quality is highly variable

Standardization of services is difficult

Services are inseparable from the service provider

Five Rs of Customer Service

Reachable: when customer needs our help

Responsive: handle a customer’s problem or request promptly

Readable: Communicating clearly and concisely

Reliable:

Reasonable:

International Marketing

Home Country

Host Country

International Marketing involves the marketing of goods orServices outside an organisation’s home country.

Reasons for International Marketing:

To sell out the surplus

To achieve sales and promotion stability

To lower the cost of business

To reduce business risk

Marketing Planning and MarketingAudit

Planning defined

A systematic process of forecasting the future business environment and deciding on the most appropriate goals, objectives and positions for best exploiting that environment.

Planning is an activity and a process.

The marketing plan

Provides clear and unambiguous statement about the strategies and actions that will be implemented, by whom, when and with what outcomes.

Criteria for Differentiating Plans

• Organisational - long term and strategic in focus.

• Divisional - implementation focus within a shorter time span and within clearly specified parameters.

• Timing.

• Regularity - longer term plans have annual reviews whilst short term plans are often part of a hierarchy linking strategy with operations.

• Focus - organisational, functional, etc.

Benefits of Planning

The marketing planning process

(1)- Objectives, targets and mission

• Quantitative targets - e.g. financial, operating, etc.

• Philosophical targets - vision and values.

• Qualitative targets - service levels, etc.

Qualitative targets

Objective trade offs

• Short term v long-term growth.

• Profit margin v market positioning.

• Direct sales effort v market development.

• Penetrating existing markets v developing new ones.

• Profit v non-profit goals.

• Growth v stability.

• Change v stability.

• Low risk v high risk.

(2)- The marketing audit

• Takes stock of a company’s marketing health.

• Is the launching pad for the marketing plan.

• Encourages management to reflect on the environment and company’s ability to respond.

• Encompasses the external and internal audit.

Marketing audit issues

• Macro environment.

• Task environment

• Markets.

• Strategic issues.

• Marketing mix.

• Marketing organisational structure and organisation.

(3)- Marketing analysis

S - strengths.

W - weaknesses.

O - opportunities.

T- threats.

(4)- Marketing objectives

Four fundamental areas related to marketing objectives:

• Achieving market share growth or maintenance

• The maintenance or improvement of profitability

• Establishing an opening marketing position

• Maximising cash flow, harvesting

(5)- Marketing strategies and actions

The means by which a company sets out to achieve its marketing objectives. This can be by:

• Repositioning the product.

• Improving product packaging.

• Amending prices.

• Improving productivity.

• Standardisation.

• Changing sales or customer mix.

(6)- Marketing programmes

Precisely specify actions, responsibilities, timescales

(7)- Marketing budget

Precise and detailed:

to justify the resources requested;

to permit detailed control and evaluation

Flexibility: to cope with changing circumstances

(8)- Marketing control and evaluation

Short-term and long-term

Market and sales potential

The maximum level of demand available within the total market over a given period.

Difficulties in estimating market potential:

• Maximum level of demand.

• Total market.

• Level of competitive activity and trends.

• Sales potential.

Estimating market and sales potential

• Breakdown methods - based on total market measurement or statistical series analysis.

• Build up methods - census, survey and secondary data.

Market and sales forecasting

The sales and market forecasts provide the basis for all subsequent planning and decision making.

Forecasting indicates what will happen in a given environment if a specific set of decisions and actions is implemented with no subsequent changes.

Forecast characteristics

(Wheelwright and Makridakis, 1977)

• Based on historical information from which projections can be made.

• Look forward over a specific, clearly defined time period.

• Make clearly specified assumptions, since uncertainty characterises the future.

The four stage approach to forecasting

(Wolfe 1966)

Forecasting methods

Different ways of organising marketing activities

• Function.

• Product.

• Geographically.

• Segments.

• Matrix.

Functional organisation

Product organisation

Regional organisation

Matrix organisation

The marketing control process

Examples of marketing performance evaluation methods

• Sales analysis.

• Costs and profitability analysis.

Sales analysis

Marketing costs and profitability analysis

Figure 21.9

Problems estimating marketing costs according to Wilson et al 1992

• Long term or lagged effects.

• Joint costs.

• Isolating effects.