Introduction to Marketing.ppt 2 (M&S CASE)-Complete

Introduction to

Marketing:Sessions 1-2

KNOW YOUR FACULTYProf. Freda J Swaminathan

Faculty at FORE since 3 years. Graduated from the Indian Institute of Management, Ahmedabad and Illinois State University ( USA).

•Professional in Advertising, Corporate Communications and Marketing. Worked with leading organizations viz LINTAS ( 8 years), JW Thompsons Associates ( 4 years ), Goodyear ( 3 years ), Advertising & Sales Promotions – CK Birla group ( 6 years ) and the Dalmias ( 3 years ).

•Worked on some of India’s leading FMCG brands and services.

•On the client side, handled major ad agencies including Leo Burnett, McCann Erickson, Enterprise Nexus & Percept Advertising.

Core Courses – Marketing 1 & 11Marketing 1Decision areas in Marketing• Assessing market opportunity

– Customer analysis– Competition Analysis– Assessing Marketing Environment

• Designing the Market Offering– Product offering– Promotions

Marketing 2• Market Assessment and Forecasting• Market Research and Information System• Delivering the Offer

– Sales and Distribution Management– Pricing

• Emerging Issues in Marketing

Assessment Methods and Marks Distribution

Method Weight

Class Participation & In class presentation

15%

Written submissionsGroup Projects @ 5*3 =15Cases @ 5 * 2 = 10Quiz @ 2.5 * 2=5

30%

Mid Term 15%

Final Exam 40%

Projects due in July, 2008Group Projects – 3 nos. Group to be of 3-5 membersRead the assignment given in the Reading

Material.Report is due on the day of presentation.First presentation on Session 5.Second presentation on Sessions 12 & 13Case analysisVora & Co – due on Session 9 Quiz on Session 7

M T W TH F S Remarks

1 2Session 1

3 4Session 2

5

7Session 3

8 9Session 4

10 11Session 5

12

14Session 6

15 16 17Session 7

18Session 8

19

21Session 9

22 23Session 10

24 25Session 11

26

28Session 12

29 30Session 13

31

JulyAugust

“ In the factory we produce cosmetics. In the drugstore we sell hope.” Charles Revson

Work in Pairs:Make a similar statement for anotherProduct.

Role of Marketing in an Organization

Introduction to Marketing

Activity 1Work in pairs

1.Name 3 Goods that are marketed in our country?2 Specify 3 brands within the goods mentioned. Select one brand that you will discuss.3 Who would be the customer and consumer of the brand?4 Describe a single judgement of the following for the brand selected :Product :(Can be variety, quality, Quality, Design, Features, Brand Name, Packaging, Sizes, Services, Warranties, Returns, etc)Price :(list price, discounted, credit, premium pricing, offers, etc)Place :(distributors, retailers, malls, kirana stores, dealers, showrooms )Promotion:( advertising, sales promotion, public relations, direct marketing, sales force)5. What are the following influences:TechnologyGlobalizationCustomizationCompetitionConsumer expectationsRetail changesInternet6. How does this brand affect the environment ?

Marketing Variables - Marketing Mix

• Product• Price• Promotion• Place

Using the Marketing Mix to build long term relationships.

What is Marketing?Marketing is finding out what the consumer wants and then

giving it to him / her, in a commerciallyviable manner.

Marketing therefore becomes an attitude, a state of mind and a philosophywhich guides the operations of a business.

.

What is Marketing?

"Marketing is the activity, set of institutions and processes, for creating,

communicating, delivering and exchanging offerings that have value for

customers, clients, partners, and society at large.“

AMA, 2008

Concepts of Sesson 1

• What is Mktg• Marketing mix

Next session : Mark’s & Spencer’s. Read the case for a mini quiz.

Mark’s & Spencer’s

Session 2

Project 1

– What were the triggers of purchase.– What were the stages in the purchase processes.– What inputs were sought in each of these stages.– Who played what kinds of roles in each stage

and– Approximately how much time was taken in each

stage.– Was there any post purchase dissonance?

Methodology• Based on the learning’s and insight from the in-depth discussions

with THREE consumers, please draw implications for marketing decisions.

• Ask probing questions.• Do not construct a structured questionnaire. Just carry with you a

list of questions to guide you discussions.• The report should be limited to 3 pages ( one and a half space, 12pt

Times Roman / Arial ) including Appendix, if any.• The report is due just before the presentation.• Late submissions irrespective of reasons, however genuine, will

have a 50% reduction in marks if the report is submitted after the next 2 days and will not be accepted beyond 2 days.

Four Eras of Marketing History

“A good product will sell itself.”

“Creative advertising and selling will overcome consumers’ resistance and convince them to buy.”

“The consumer rules! Find a need and fill it.”

“Long term relationships with customers and other partners lead to success.”

Prior to 1920’s to 1950’s Since 1950’s Since 1990’sEra Production Sales Prior Marketing Relationship

In the United States and other highly industrialized economies

Relationship Marketing

The development, growth, and maintenance of long-term, cost-effective exchange relationships with individual customers, suppliers, employees, and other partners for mutual benefit.

Advocate

LoyalSupporter

RegularPurchaser

NewCustomer

16l

Customer Needs / Wants / Demands

Directed at specificObjects – shaped byone’s society. Eg.Rice, dals, fruits

Wants for specific products backed by an ability to pay.

Eg : Pepsi, Benz, etc.

Customer Needs ( Basic )

Wants DemandsEg. FoodAir, shelter

I want it, I need it…..

5 Types of Needs

• Stated needs:• Real needs:• Unstated needs:• Delight needs:• Secret needs:

I want it, I need it…..

5 Types of Needs

• Stated needs: admission to a good institute.• Real needs: must afford the fees.• Unstated needs: good teaching from faculty• Delight needs: good placement• Secret needs: good brand to last a life time

How do we identity needs, wants , desires and market to diverse and large crowds :

STP

Brands &Benefits

CustomerSatisfaction

Markets:ChannelsSupply ChainCompetition

MktgEnvn.Societal

Forces

ConsumerCapabilities

Company Capabilities

Internal Marketing: Relationship Marketing;Integrated Marketing

4 P’s

Make Product(Design, Procure, Make)

Sell Product(4 P’s / 4 C’s)

Product Process

STPSegmentation, Targeting,

Positioning

Provide & CommunicateValue through

4 P’s / 4 C’s

Value Creation & Delivery

Strategic Marketing Tactical Marketing

Marks & Spencer

Decision Areas in Marketing•Creating customer value•Strategic planning

Characteristics of Company

• No senior mngt sign off – too much delegation• Too much inventory• High profile customers• St Michael’s – a value for money brand• 16 sub brands .• Advertising not aspirational but functional• Diverted from retail heartland – not customer focused.• New competition like Next, Walmart ( ASDA)• Led by consultants experimenting with projects• De motivated staff

What Stuart Rose did • Fighting off a hostile takeover• Managing Press• Support of 2 trusted execs – in IT and Marketing• Streamlined 5 sourcing offices• Made suppliers conscious of this being ‘our’ problem and reduced costs• House cleaning – off many brands• Retrenched 650 staff but retained home grown talent• Motivated retained staff – making them customer focused• HR measures• Stock management – 2 crimes : overstocked and short of stock• Daily reporting to ceo of stock position• Problems are not allowed to fester• Focus on the basics of the business – improve product / store / service• Selling off their financial services to HSBC• Buying Per Una womens wear brand

Marks & Spencer

• What is M&S strategy• What value is being created • What should S Rose do and why

Concepts of Sesson 2

• Strategic and Tactical Marketing• History of marketing• Relationship marketing• Consumer orientation in marketing• Needs wants demands (basic) ( aimed at object) desire for brand

Marketing Mix and the Customer

Four Ps• Product• Price• Place• Promotion

Four Cs• Customer solution• Customer cost• Convenience• Communication

Marks & Spencer

• What is the problem that Stuart Rose was facing when he took charge of M&S?

Stuart Rose’s concerns

Processes

Stakeholders

Resources

Organization

Defining the corporate mission for M&S

• Mission– What business is M&S in? What businesses should

we be in? What do we do best? What are the values/ethics of the firm?

– Define business by need rather than product features.

- Lodging vs hotel- Quick service restaurants vs fast food hamburgers

Marketing Myopia

Management’s failure to recognize the scope of its business.

Avoiding Marketing Myopia by Focusing on Benefits

“We are in the entertainment business.”

“We are in the video game business.”

Sony

“We are in the financial services business.”

“We are in the stock brokerage business.”

Prudential Securities

“We are in the transportation business.”

“We are in the airline business.”

Northwest Airlines

“We are a communications company.”

“We are a telephone company.”

MCI Worldcom

Marketing-Oriented Description

Myopic DescriptionCompany

Stuart Rose had multi portfolios

• Food• Textiles• Others

What strategy for each ?

Characteristics of SBUs

• It is a single business or collection of related businesses

• It has its own set of competitors• It has a leader responsible for:

– Strategic planning– Profitability– Efficiency

37

Assigning resources to each SBU.

• Analytical tools such as the Boston Consulting Group growth-share matrix are used to guide.

• Anticipate changes

Question Marks• High growth, low share • Build into Stars or phase out • Require cash to hold market share

Stars• High growth & share• Profit potential • May need heavy investment to grow Cash Cows• Low growth, high share• Established, successful SBU’s•Produce cash

Dogs• Low growth & share • Low profit potential

Relative Market ShareHigh Low

Mar

ket G

rowt

h Ra

te L

ow

H

igh

Analyzing Current SBU’s:Boston Consulting Group Approach

?

Porter’s Generic Strategies

• Overall cost leadership• Differentiation• Focus

Current Market

New Markets

1 2 3 4 5 6

Time ( years )

Sales(Value )

Current Portfolio

Intensive growth

Integrative growth

Diversification growth

ThroughCurrent products

Backward / forwardIntegration in same business

New Business

Alternative Strategies

HOLISTIC RELATIONSHIP MARKETING FRAMEWORK

MARKETSPACE

POTENTIALOPPORTUNITIES

BUSINESSINVESTMENT

CUSTOMERS CORPORATION COLLABORATORS

3) What are the potential opportunities emerging from the market space?

4) What business capabilities and infrastructure required?

1) Who is involved?

2) How can we define relevant market space?

HOLISTIC RELATIONSHIP MARKETING FRAMEWORK

MARKETSPACE

POTENTIALOPPORTUNITIES

BUSINESSINVESTMENT

CUSTOMERS CORPORATION COLLABORATORS

CUSTOMER CUSTOMER FOCUSFOCUS

CORE CORE COMPETENCIESCOMPETENCIES

COLLABORATIVE COLLABORATIVE NETWORKNETWORK

2) How can we define relevant market space?

3) What are the potential opportunities emerging from the market space?

4) What business capabilities and infrastructure required?

1) Who is involved?

ExploreValue

Createvalue

DeliverValue

Characteristics of Core Competencies

• A source of competitive advantage• Applications in a wide variety of markets• Difficult to imitate

Printed on CANON

COMPETITIVE PLATFORMS

MarketOfferings

COGNITIVESPACE

CUSTOMERVALUE

BUSINESS DOMAIN

COMPETENCYSPACE

BusinessArchitecture

BUSINESS PARTNERS

CRM ERP

RESOURCE SPACE

SCM

Marketing Activities

OperationalSystem

Creating Creating ValueValue

DeliveringDeliveringValueValue

Customer Customer FocusFocus

Core Core CompetenciesCompetencies

Collaborative Collaborative NetworkNetwork

Categories of Marketing Alliances

• Product or Service Alliances• Promotional Alliances• Logistics Alliances• Pricing collaborations

When you create a concept, you

create a future…

Marketing….

Concepts of Sesson 3

• A holistic marketing framework• Marketing myopia• Core competency• SBU• BCG Matrix

Consumer Decision Making Process

6-50

What Influences Consumer Behavior?

• Cultural factors – related to values/social class / religion/community

• Social factors – related to reference groups, family, roles & status.

• Personal factors – related to family life cycle / occupation / personality / self-concept / life style

6-51

Social Factors

Referencegroups

Social roles Statuses

Family

6-52

Reference Groups

• Membership• Primary• Secondary• Aspirational• Dissociative

6-53

Family

• Family of orientation– Religion– Politics– Economics

• Family of procreation– Everyday buying behavior

6-54

Personal Factors

• Age• Life cycle stage• Occupation• Wealth

• Personality• Values• Lifestyle• Self-concept

Socio economic Classification

• Urban : Occupation & Education ( SEC A, B,C & D )

• Rural : Type of House ( pucca, semi-pucca and kucha ) and education ( R 1, R2 etc )

Socioeconomic Classification (SEC) Matrix—India (Urban)

Key Psychological Processes

• Motivation• Perception• Learning• Memory

Motivation

• Maslow’s hierarchy of needs• Freud’s theory• Herzberg’s two-factor theory

Physiological Needs(Food, water, air, shelter, sex)

Safety and Security Needs(Protection, order, stability)

Social Needs(affection, friendship, belonging)

Maslow’s Hierarchy of Needs

Ego Needs(Prestige, status, self esteem)

Self-Actualization(Self-fulfillment)

Besides ‘Needs’ behavior is due to :

• Unconscious psychological process ( Freud )

• Motivations that cause satisfaction or dissatisfaction ( Herzberg )

• High involvement or low involvement product

Perception

• Selective attention• Selective retention• Selective distortion• Subliminal perception

How do consumers make buying decision?

• Initiators• Influencers• Deciders• Buyers• Users

6-63

Consumer Buying Process• Problem recognition• Information search• Evaluation• Purchase decision• Postpurchase behavior

6-64

Other Theories of Consumer Decision Making

Involvement• Elaboration likelihood

model• Low-involvement marketing

strategies• Variety-seeking buying

behavior

Decision Heuristics ( non rational)

• Availability – quickness & ease• Representativeness ie how

similar is the outcome• Anchoring and adjustment .

First impressions are lasting impressions.

Economic Conditions

New Technology

Media

Law & Politics

Social Culture

Marketing mix (competitor & own)

Characteristics resultingfrom:-social /reference groups-family values-role & status

Personal circumstances-socio-economic-life style-personality

Decision process-need recognition-information search-evaluation-purchase intention-purchase-post purchase perceptions

Product form

Brand

Retail outlet

Value

Form of payment

Timing of purchase

External Factors Buyer’s Black Box Outcomes

Consumer’s Purchase Decision

Session 3

• Reference group• Aspirations• Maslow• Freud• Herzberg• Selective Attention• Decision making process• High & Low involvement

Pages 163 – 171 are optional readings.