• A Professor at one of the IIM's (INDIA) was explaining marketing concepts to the Students:-– 1. You see a gorgeous girl at a party. You go up to her and
say: "I am very rich. Marry me!" - That's Direct Marketing – 2. You're at a party with a bunch of friends and see a
gorgeous girl. One of your friends goes up to her and pointing at you says: "He's very rich. Marry him." - That's Advertising
– 3. You see a gorgeous girl at a party. You go up to her and get her telephone number. The next day, you call and say: "Hi, I'm very rich. Marry me." - That's Telemarketing
About Marketing….
– 4. You're at a party and see gorgeous girl. You get up and straighten your tie, you walk up to her and pour her a drink, you open the door (of the car) for her, pick up her bag after she drops it, offer her ride and then say: "By the way, I'm rich. Will you marry me?" - That's Public Relations
– 5. You're at a party and see a gorgeous girl. She walks up to you and says: "You are very rich! Can you marry me?" - That's Brand Recognition
– 6. You see a gorgeous girl at a party. You go up to her and say: "I am very rich. Marry me!" She gives you a nice hard slap on your face. - That's Customer Feedback
– 7. You see a gorgeous girl at a party. You go up to her and say: "I am very rich. Marry me!" And she introduces you to her husband. - That's demand and supply gap
– 8. You see a gorgeous girl at a party. You go up to her and before you say anything, another person comes and tells her: "I'm rich. Will you marry me?" and she goes with him - That's competition eating into your market share
– 9. You see a gorgeous girl at a party. You go up to her and before you say: "I'm rich, Marry me!" your wife arrives. - That's restriction for entering new markets
Marketing is for Everybody
• TO SHOW THAT MARKETING IS ESSENTIAL• PROVIDE AN UNDERSTANDING OF THE BASIC
MARKETING CONCEPTS
The Nature of Marketing
• What is the Purpose of Marketing?1.Satisfaction:• Functional Satisfaction • Psychological Satisfaction• The Utility concept
2. Consumer Problems3.Providing Benefit Bundles4..Offering a Total Consumption System
Simple Marketing System
Industry(a collection
of sellers)
Market(a collection
of Buyers)
Goods/services
Money
Information
Communication
The Nature of Marketing
• What is the Purpose of Marketing?Satisfaction• Increments of Satisfaction• Facilitating Exchanges
–Conditions for Exchange•Systems of Exchanges
Evolving Views of Marketing’s Role
The customer as the controllingfunction and marketing as the
integrative function
Customer
Marketing
Production
Human
resources
Finance
Customers
Front-line people
Middle Management
TopManagement
Traditional Organization Chart
Customer-Oriented Organization Chart
Customers
Front-line people
Middle management
Topmanage-
ment
Customers Custom
ers
Core Concepts of Marketing
Product or Offering Value and Satisfaction
Needs, Wants, and Demands
Exchange and Transactions Relationships and Networks
Target Markets & Segmentation
Marketing Channels Supply Chain Competition
Marketing Environment
Nike Town
Experiential marketing!?
Disney Experience!
Apple Store
Implications of marketing
• 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?
The marketing concept
• choosing and targeting appropriate customers
• positioning your offering• interacting with those customers• controlling the marketing effort• continuity of performance
Evolving Indian Consumer
The Indian Consumer’s Changing Spending Patterns
Food & Grocery Fuel, Transport & Communication Discretionary Expenditure
Rent, Utilities & Education Savings & Investment
2008 2013
Changing consumer behavior is catalyzing change in spending patterns, freeing up income for discretionary
expenditure
Emerging Trends
Shift to Thrift
Redefining Value
Small WondersSmall Perk Me Up
Products
‘Mummy ka Magic’Stays Intact
Eating ‘Out’ at Home
Evolving Home Delivery Model
Taste Bhi, Health Bhi
A very strong co-relation
Sattva Foods……..
Quality Walls’s “MOO” – Calcium Enriched !
Food On The Go
Instant Pick Me Up
Eco ConsciousEco ConsciousA light shade of green
Food As Discovery More Experimenting
The Food ‘Connect’
Use of Social Media
POP will remain SupremeThe final test
The changing Indian consumer
The media explosion.
Increase in disposable income.
The rise of the great Indian middle class
Increase in the number of earning young people
Change in expenditure patterns
Increase in the number of working women38
Successful marketing requires:
• Profitable
• Offensive (rather than defensive)
• Integrated
• Strategic (is future orientated)
• Effective (gets results)
Nirma Little Girl!
“Surf” ad with Lalitaji!
Lux ad in 1950s!
Lux Beauty soap with Katrina!
Mantri Square, B’lore!
What is Marketing ?
Selling ?
Advertising ?
Any thing more?
• SOME ISSUES ON MARKETING
Model of Consumer BehaviorMarketing Mix Stimuli
• Product• Price• Promotions• Advertising•Place
Buyer’s Black Box
??
Psychological•Memory •Perception• Motivation• Personality
Demographics
Environmental• Family•Culture
Buyer’s Responses
• What is purchased?• When, Timing?• How much?• For what use?
Examples of Buying Motives:Psychological or Functional?
• A senior wants to impress his date at the prom .His primary motive is …?
Psychological
Examples of Buying Motives:Psychological or Functional?
• A girl wants to remember her grandmother on her birthday.Her primary motive is…?
Psychological
Examples of Buying Motives:Psychological or Functional?
• A homemaker needs a new washing machine and has had good experiences with Sears.
Her primary motive is …?
Functional
Examples of Buying Motives:Psychological or Functional?
• A teacher wants to buy a practical car to be used for family transportation.Her/His primary motive is …?
Functional
Examples of Buying Motives:Psychological or Functional?
• A career woman always buys Liz Claiborne clothes.Her primary motive is…?
Psychological
Examples of Buying Motives:Psychological or Functional?
• An overweight 40 year old man wants to loose weight so that he can reduce his blood pressure.His primary motive is…?
Functional
Examples of Buying Motives:Psychological or Functional?
• A homeowner needs to mow their lawn. Their primary motive is…?
Functional
Consumer Buying Behavior CompetencyFunctional Motive
Psychological Motive
The price is 40 cents off the regular price.It never needs ironing.
Diamonds are forever.Serving you since 1971.
Ninety-day warranty.
Consumer Buying Behavior Competency
Functional Motive
Psychological Motive
Running shoe with built-in arch.It’s all the rage—colored action wear and style.Wheaties—the breakfast of champions!Steel-belted radial tires warranted for 40,000 milesA watch—a gift she will treasure always.
What is Marketing ?We use the word Marketing to describe such things as• analyzing the needs of the people• trying to guess what types of products they want• estimate how much they will buy• predict when they want to buy• determine where they go to buy the stuff
What is Marketing ?
…. And,• figure out the best price to sell it at - and can you still make a profit
selling it at that price• decide on promotional things to create awareness about the product• look at the competition to see what they are doing with pricing,
features etc.
Marketing is concerned with anticipating consumer demand and directing flow of goods from producers to consumers.
Marketing has to do with matching producers’ outputs to consumers’ inputs [ needs & wants ].
Serving the needs of customers is what business should be all about …
Marketing is the business function that interprets customer needs to the rest of the organization.
Marketing should begin with the customer needs - NOT with the production process. Mkt. should anticipate needs.
Process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individuals and organizational objectives.
Marketing - the formal definition
Why should we know about Mkt.?
• Also, Cause,,,,,,,,,,,,,,,,,, marketing people in a company bring in the moneybring in the money - so their jobs are important, so they get paid a lot.
• If you get involved in the marketing side, you are being involved in the INCOME side of the company and your job is very critical (ie. - hard to ever fire you or lay you off)
The Importance of Marketing
• Why study Marketing - ‘cause you can get a JOB in Marketing !!
• Canada is a very multi-cultural country• We can buy products from all over the world• Selling new products to Canadians requires
new marketing approaches - THEREFORE there will be many new job opportunities
The Importance of Marketing
• Marketing is a core business discipline• The study of marketing is important to the basics of
running a business, big or small
• When you buy a product - the cost of marketing amounts to 40 ~ 60% of the totaleg. If we buy shoes for Rs.800, Rs.400 of that 800 has been spent on marketing (including advertising, market research, development etc.)
The Importance of Marketing
Getting a JOB in Marketing !!• Personal selling• Advertising• Package Design• Transportation• Storage• Marketing Research• Product Development• Wholesaling• Retailing
The Importance of Marketing
Importance to Companies• When you work in the marketing department of a
company you are part of LINE personnel• LINE personnel are always more critical than STAFF
personnel because LINE personnel “bring in the money” - therefore your job is revenue earning, not revenue spending
Why should we know about Mkt.?
• You can get to be C.E.O. and Chairman of the Board
• “Marketing is often the route to the top”
• Almost always the C.E.O. comes from the V.P. Marketing, not V.P. Human Resources or V.P. Government Relations
The Importance of Marketing
Getting a JOB in Marketing !!In addition, many people working with NPO’s also
do marketing• Promoting political parties• Cultural groups• Religious organizations• Civic organizations eg. Kiwanas, Shriners• Charitable organizations eg. Red Cross, Salvation
Army
Marketing
• Marketing is something companies do, and it is also a characteristic of our society
• “It is both a set of activities performed by organizations, and a social process”
Micro - marketing for a company
Macro - the whole economy
Micro - marketing for a company, things you do to accomplish the organizations objectives (companies and NPO’s)
Macro - the whole economy and its flow of goods and services from producers to consumers
Micro - Its not just selling stuff, but also looking at what the customers want
Macro - Looking at how everybody in the country can have access to things they need. Government has to make sure everybody has fair access.
Micro-Macro Dilemma
• Government has to step in cause not everything would be produced fairly by companies - so regulation needed
• Ex .1: It would be cheaper to make cars without airbags and seatbelts - but Govt. insists they must – so, it has to be done.
Micro-Macro Dilemma
• Government has to step in cause not everything would be produced fairly by companies - so regulation needed
• Ex. 2: It would be cheaper to make beer cans from raw material cause the price of mineral ore is low - but the Govt. insists a certain % must be recycled to reduce waste and pollution
The Marketing Functions
BuyingTransportingStoringGradingFinancing Risk TakingInformation Collection Research….
WHO does the marketing functions ?
From a Macro-point of view• Centrally planned economy (communism)
- its done mostly by the government• Market-direct economy (capitalism)
- its done by various companies, middlemen, brokers etc.
Innovation is encouraged by a market-directed economy (capitalism) because people who come up with new ideas are free to try and market them and make a fortune. In a communist country, government has strict controls on the “means of production” so there is a limit to what people can manufacture.
In a capitalist economy, people are always trying think of new ways to satisfy un-met needs, and, this encourage new thinking
A380 - Interior
Reliance i Pad ( In association with Notion Ink, HYD. )
Rolls Royce Ghost!
Advocacy Advertising
• You are not trying to sell a product, you are trying to get people to believe in something, or behave in a certain wayeg.- Don’t drink and drive- Canadian Cancer Society- recycle- use the TTC, save gas
One of the big complaints about marketing is that ppl act unethical in order to make a sale.
Sometimes it is easy to forget that morals are based on your own cultural standards and in different cultures, people have different opinions about what is ethical.
Eg. Bribery is perfectly acceptable in some parts of Asia and Latin America, but unacceptable in USA and Canada
Marketing Concept - Social Responsibility
- “improve positive effects on Society and reduce negative effects…”
- environmental problems- social responsibility conflicts with profit
objective(raises ?, is mktg concept desirable)
Marketing Concept - Social Responsibility
-? Of social responsibility cutting into profits
- some companies have been very successful at dealing with this eg. BODY SHOP
- they realize it is a way to endear themselves to trendy customers
Marketing Concept - Social Responsibility
-? What if it cuts into profitsAnswer - increasing quality may cost more in
production, but you may make this money back in increased sales which come about as the customers realize you have a very good quality product - this will reduce the advertising costs and customer service/warranty costs and ensure customer satisfaction re: brand loyalty
Company Orientations Towards the Marketplace
Orientation Description Relative TimeSpan
Basic ManagerialObjective
Production Transition from HomeManufacturing to Factories
IndustrialRevolution
Profit Maximization viaEconomies of Scale
Product &Financial
Focus on Product Development,Performance and Features and
the Growth of Large ScaleIndustrial Empires
Profit MaximizationThrough Superior
Product Performance
Sales Transition from Scarcity ofGoods to Scarcity of Markets;Market Saturation with Basics
Profit Maximization viaDemand Generation
Marketing Transition from Internal(Organization) to External
(Customer) Basis for GuidingMarketing Decisions
1990s Profit Maximization viaMatching of Products to
Customer Wants
The Marketing Concept
A Customer Orientation
Backed By Integrated Marketing
Aimed at Generating CustomerSatisfaction and Repurchase As The Key To
Satisfying the Organizations Goals
The Marketing Concept (Contd..)
Focus Means End
Sales Concept Products Selling &Promotion
Profits ThroughSales Volume
MarketingConcept
Customer Needs IntegratedMarketing
Profits ThroughCustomer
Satisfaction
Stages in Consumer Decision Process
Awareness
Interest
Decision
Satisfaction
Action
Advertising
Channel
Product /Service
Price
Word-of- Mouth
Cost of Losing and Attracting Customers
• Cost of attracting a new customer can be upto 5 times the cost of keeping a current one happy
• Cost of Offensive Marketing > Cost of Defensive Marketing
• Some companies have increased profits from 25% to 85% by reducing defections by 5%
Developing An Effective Marketing Plan
• Conduct A Marketing Review• Build A Marketing Strategy• Implement Strategy Via Marketing Mix• Evaluate The Success Of The Marketing Plan
Conduct A Marketing Review (3-C Analysis)
Opportunity Identification
B. Assessment of COMPANY
Capabilities andCurrent Marketing
Position
A. Analysis ofCUSTOMER
Trends, Needs,Perceptions,
Behavior
C. Analysis ofCOMPETITORSCurrent Position,
Capabilities, Actions
Build A Marketing Strategy
Generic Strategies ForDIFFERENTIAL ADVANTAGE
* Product Differentiation* Cost Leadership
* Special Market Focus
Selection of TARGET MARKETand Development of a
POSITIONING STATEMENT
Implementation: The Marketing Mix (Four P’s)
• Product
• Price
• Place
• Promotion
3C - 4P Framework
• Customer
• Company
• Competitor
• Product
• Price
• Promotion
• Place
ColgateIDSPDA / Infiniti
Sealed-Air
Barco
Nestle
Rohm&Haas
Intel
Dell
BMW
Marketing System
Short Term Controllable Factors
ProductPlace Price
Promotion
Long Term Factors
Technological
Legal
Socio / Cultural
Economic
Recasting the 3C - 4P Framework in Value Terms
• Customer
• Company
• Competitor
• Product
• Price
• Place
• Promotion
Creating Value
Capturing Value
Communicating Value
• The most important aspect of any company’s Marketing concept is identifying its SWOT Analysis.
• What is SWOT analysis?
SWOT Analysis - Examples
• Example 1 - Wal-Mart SWOT Analysis. Strengths - Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store. Weaknesses - Wal-Mart is the World's largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control. Opportunities - To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region. Threats - Being number one means that you are the target of competition, locally and globally.
• Example 2 - Starbucks SWOT Analysis. Strengths - Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2004.Weaknesses - Starbucks has a reputation for new product development and creativity. Opportunities - New products and services that can be retailed in their cafes, such as Fair Trade products. Threats - Starbucks is exposed to rises in the cost of coffee and dairy products.
• Example 3 - Nike SWOT Analysis. Strengths - Nike is a very competitive organization. Phil Knight (Founder and CEO) is often quoted as saying that 'Business is war without bullets. 'Weaknesses - The organization does have a diversified range of sports products. Opportunities - Product development offers Nike many opportunities. Threats - Nike is exposed to the international nature of trade.
• Example 4 - Indian Premier League (IPL) SWOT Analysis. Where will you find the Mumbai Indians, the Royal Challengers, the Deccan Chargers, the Channai Super Kings, the Delhi Daredevils, the Kings XI Punjab, the Kolkata Knight Riders and the Rajesthan Royals? In the Indian Premier League (IPL) - the most exciting sports franchise that the World has seen in recent years, with seemingly endless marketing opportunities (and strengths, weaknesses and threats of course!).
• Example 5 - Bharti Airtel SWOT Analysis. Weaknesses - An often cited original weakness is that when the business was started by Sunil Bharti Mittal over 15 years ago, the business has little knowledge and experience of how a cellular telephone system actually worked. So the start-up business had to outsource to industry experts in the field.
Replaying the Game• P&G: “We sell coffee” vs. “We sell canned coffee of moderate quality in groceries”• The brand we have built to sell mid-tier coffee will not cater to gourmet coffee
position as its made of Robusta rather than Arabica beans. So we need to launch a new brand that preempts the quality position. We may need a new design (DSD), but we’ve done radical stuff before!
• Most restaurants, food chains and institutions sell Coke or Pepsi (branded) but unbranded coffee. Once our gourmet brand is established in grocery stores, we may be able to move into the institutional market (after all, we sell to Wal-Mart!)
• Whole bean provider: Could have built a brand by opening a café division. Took 7 years for Brothers to catch on. By opening the café format, regional whole bean providers could have built brand loyalty. Especially as they do not have P&G’s deep pockets. If the regional whole bean provider launched in 1991, could have built a national brand. By 1994, it was too late.
• Starbucks: May have missed an opportunity by not aggressively expanding via franchising. Region by region rollout gave competitors / imitators time to preempt in certain markets. This way it would have “conquered” the retail business and could have focused more fully on institutional and grocery markets.
Caselet-1• While entering a developing country like India, MNCs should
consider the factors to which consumers in India are sensitive. One such factor is price. Indian consumers are price sensitive. They always looks for value of money. This explains the success of Nirma washing powder which forced HLL to come out with a low prices detergent Wheel. Also the success of a product depends on the tastes and preferences of customers. Once McDonald’s customized its products according to the tastes and preferences of the Indian customers, it found acceptability in the market. Thus, before entering the Indian market, MNCs should do a proper study of the customers’ tastes and preferences , and this is particularly applicable to food products, because in India, food habits differ from region to region.
Caselet-2
• During recession, most companies resort to downsizing and cutting costs related to advertising. But advertisement plays a crucial role in creating demand for goods. So it is not advisable to reduce costs related to advertising, rather expenditure on advertisements should increase during a recession. At this time, they build up their brands. If they do so, the companies will be in a competitive position once the recession is over and demand for goods picks up. Brand – building always involves spending on advertisements, packaging etc. Advertising during recession is also advisable because it reminds consumers about the product, and prevents the product from getting erased from consumers’ mind.