Innovation of Marketing

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TITLE; INNOVATION OF MARKETING

DISSERTATION PROJECT REPORT

Submitted in partial fulfillment of the

Requirements for the award of

Post Graduation Program in Business Management

23March 2009

NAME : VIKAS KUMAR

ROLL NO : 3104

Under the Supervision of

Prof. VISHAL PRADHAN.

KOHINOOR BUSINESS SCHOOL, KHANDALA


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Acknowledgement

I am thankful to my college for providing me a golden opportunity to do a project in such a good

topic which helped me in learning a lot of things. I take this opportunity to express my sincere

thanks and wholeheartedly acknowledge my esteemed guide professor VISHAL, for his

continuous help and guidance throughout the project duration in spite of his busy work schedule

I would also like to express my special thanks to my respondents for sparing their valuable time

out of their hectic schedule and answering to our questionnaire and for helping me out with all

the information i needed for the analysis.

Finally i would like to thank each and everyone associated with my project for their

constant help because without them the success of the project would not have been possible.


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What is marketing?

Marketing is basically your interaction with your consumer. This interaction with

your consumer is done so that you can get the consumer to purchase your product or

service. Basically that is what marketing is all about, getting the customer to

purchase your product or service!

There is a tendency to confuse marketing with other terms like advertising or

publicity etc. However, advertising is only a small part of marketing. Advertising

is one of the ways in which you can get the customer to purchase your product or

service. There are many other ways. Like "publicity" though newspapers will

increase awareness about your product or service and thus may get the customer to

purchase your product or service.

The point is that marketing is a mixture of all the activities of advertising,

promotion, publicity, deciding the look and feel of the product, how it will be sold

and sent to the consumer etc. All of these are the different parts of marketing. They

are not marketing.

Marketing can be thought of as a mixture of all these activities that will get the

consumer to buy your product. In fact, this gives us one of the important terms

related to marketing called "marketing mix". Marketing mix, as stated above is a

mixture of all the above stated activities designed to get a particular set of

consumers to buy your product. These terms will be explained later in much more

detail.


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This article is written for small business who want to increase their customers

though marketing as well as large business who plan to target even the whole

country as their target market. Besides that, it serves as a good text, that will give

you a practical understanding of what the marketing process is all about.

Understanding the Indian Consumer

Here we have tried to provide you an overview of who our Indian consumers are.

How our Indians think. And a brief overview of what kind of a market India is. The

next few pages will cover all this information in detail.

Note: Our country is growing at a very rapid pace. The state of job opportunities,

salaries etc. is improving rapidly. Simply put the county is changing every day for

the better.

So this information holds true now (as in when this article was written i.e. Jan 2nd

2006) and will be more or less true a few years from now. However, it would be a

good practice to keep in touch with the latest trends in thinking of the Indian

consumer.


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Literacy scenario of India

It is important to consider the literacy of the Indian consumer.

For Example: When launching a marketing campaign, if all the advertising is done

though a non-visual/non-audio media like the newspaper, the marketer must know

whether his target consumer is in a position to read the advertisement i.e. is the

target consumer literate.

Literacy Scenario in India (As per 2001 Census)

Literacy in India has made remarkable progress since Independence. This has been

further confirmed by the results of the Census 2001. The literacy rate has increased

from 18.33% in 1951 to 65.38% in 2001. This is despite the fact that during the

major part of the last five decades there has been exponential growth of the

population at nearly 2% per annum.


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Some o f t he impor t an t h igh l igh t s o f Census 2001 :

The male literacy rate has increased to 75.85%, which shows an increase of 11.72%.

On the other hand, the female literacy of 54.16% has increased at a much faster rate

of 14.87%.

The male-female literacy gap has reduced from 24.84% in 1991 to 21.70% in

2001. Mizoram has the smallest gap (4.56%) followed by Kerala (7.45%) and

Meghalaya (8.27%).

All States and Union Territories without exception have shown increase in literacy

rates during 1991-2001.

In all the States and Union Territories the male literacy is now over 60%.

For the first time since independence there has been a decline in the absolute number

of illiterates during the decade. In the previous decades, there has been a continuous

increase in the number of illiterates, despite the increase in the literacy rates, but

now for the first time the total number of illiterates has come down by 31.96 million.

The number of literate persons has increased to 562.01 million in 2001 thus adding

an additional 203.61 million literates in the country.

Rajasthan has recorded the highest increase in the literacy rate among the

States/Union Territories of India. The state also recorded very good increase in the

female literacy. It was 20.44% in 1991 which has increased to 44.34% in 2001.


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Madhya Pradesh also recorded a good increase in female literacy rate. In 1991 the

literacy rate of females was 29.35% which has increased to 50.28% in 2001.

On the bas i s o f l i t e r acy r a t e , S t a t e /UTs can be

g rouped a s unde r :

High Literacy Rate States (80% and above): Kerala (90.92%) Mizoram (88.49%),

Lakshadweep (87.52%), Goa (82.32%), Delhi (81.82%), Chandigarh (81.76%),

Pondicherry (81.49%), A & N Islands (81.18%) and Daman & Diu (81.09%).

Literacy Rate above national average states (above 65.4% - and below 80%):

Maharashtra (77.27%), Himachal Pradesh (77.13%), Tripura (73.66%), Tamil Nadu

(73.47), Uttaranchal (72.28%), Gujarat (69.97%), Punjab (69.75%), Sikkim

(69.68%), West Bengal (69.22%), Manipur (68.87%), Haryana (68.59%), Nagaland

(67.11%) and Karnataka (67.04%).

Literacy Rate below national average states (below 65.4%) : Chhattisgarh(65.18%),

Assam (64.28%), Madhya Pradesh (64.11%), Orissa (63.61%), Meghalaya

(63.31%), Andhra Pradesh (61.11%), Rajasthan (61.03%), Dadra & Nagar Haveli

(60.03%), Uttar Pradesh (57.36%), Arunachal Pradesh (54.74%), Jammu & Kashmir

(54.46%), Jharkhand (54.13%) and Bihar (47.53%).


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Urban and rural life of India

Up until recently, large part of the marketing that was done in this country was done,

targeting the urban population of the country. Now the marketing potential of the

rural part of the country is rapidly growing. Let us get an understanding of the urban

and rural break up of the country.

26% of the population lives in the cities or in urban India. The remaining 74% lives

in the villages or in rural India. The population of the country is spread over the

villages but is very concentrated in the cities. India has six of the largest cities in the

world. These are - Calcutta, Bombay, Delhi, Madras, Bangalore and Hyderabad.

Besides these cities, there are six other cities that are growing at a very rapid rate

and have a huge concentration of the population. These are - Ahmadabad, Kanpur,

Pune, Nagpur, Lucknow and Jaipur. In addition to these cities, there are around 4000

towns that have concentrations of the population.

In the cities, there are a lot of jobs available now-a-days due to call centers and

BPO's. This has given many more people purchasing power. Items that were luxury

items a few years a go are seen in every house in the cities.

Besides the cities 74% of Indian population lives in the villages. As the standard of

living in the villages also improves, many modern facilities are available in almost

every house hold in the villages too.


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Now a day the TV is there in most of the houses in the villages too. This has

exposed them to a lot of advertising lifestyles and products. The villages have

become a huge market that will be of great consequence in the near future. In the

future, companies with a strong product distribution system reaching all the villages

will have a very strong advantage over the rest.

The country is growing, and is a place where business will thrive in the near future.

To understand this better consider the following favorable shifts that have taken

place in the consumer patters of buying.

Indian consumers are buying more than ever

The country is growing, and is a place where business will thrive in the near future.

To understand this better consider the following favorable shifts that have taken

place in the consumer patters of buying.

F a v o r a b l e s h i f t s i n c o n s u m p t i o n p a t t e r n :

Analysis shows that over the years, the expenditure on non-food items has grown

faster that the expenditure on food items. India is witnessing a great change in the

lifestyles and buying patterns of consumers. Convenience foods like instant coffee

and noodles are now very popular. The number of modern gadgets like washing


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machines in the number of house holds is now on the increase. As we have

mentioned before, yesterdays luxuries are now becoming todays necessities.The Indian consumer has more money and is now using it more liberally than ever before.

Food and drink have acquired a greater "fun" image for him than ever before.

Understanding Indian economical classes

The country is very diverse and has many different languages, cultures, beliefs etc. It

is hard to categorize the Indian buyer on basis of this diversity because it is so

varied.

The consumers in India can be classified on basis of their economic status to get a

better idea about the populations buying behavior.

The a ff luen t g roup :

The affluent group forms a very small part of the population of the country. They are

negligible in percentage. A large manufacturing/marketing business cannot be

supported by the consumers from this group alone. (Unless the products are

especially designed, high priced luxury products.)

The midd le c l a s s :

The middle class forms the customer base for most of the business in the country.

India has a very large middle class. The population of the middle class exceeds the

population of both Germany and France put together. This is the largest economic


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class in the country. Special attention is to be given to the consumers in this class

and so this class will be discussed in detail a little later.

The poor :

The poor class is the second largest class in the country. They have very little

purchasing power. However, now as the country is growing, and due to the work of

many social, educational and economic programs, a large part of this class is slowly

merging into the middle class.

Because of the TV and the booming media, even the economically lower class of the

Indian population craves for a lifestyle like the well-to-do people they see on the

TV.

The Indian middle class house wife as a consumer

The percentage of working women in India is growing at a steady pace. This is

mainly because of the development in communication systems and growth of

educational opportunities given to women. Because of this growth of working

women, the women now-a-days also have an increased purchasing power. Due to

this, industries that are directly related to women like cosmetics etc. have seen a

major boost. Also, toiletries, food and beverages etc. have seen a growth.


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The middle class house wife is generally educated and is the purchasing agent for

some of the products the family buys. She is also the "gatekeeper" for many

products like new cooking medium, fast food etc. that cannot enter the house

without her clearance. She also decides purchases meant for children.

To get a much better understanding of the Indian house wife, consider the following

characteristics of her buying decisions:

Caut ious , bu t no t ave r se to change :

The middle class house wife is generally educated, earns her own money or has to

use money given to her on a fixed budget. This makes the middle class house wife a

discriminating and cautious buyer. However, she is not averse to new ideas and

things. She is willing to try new things but she will not adopt any product instantly.

She will make a sample purchase, check with people who use the product, listen for guidance and then finally she may go in for purchasing the product.

Qual i ty a s we l l a s cos t cau t ious :

The middle class house wife is a quality as well as cost cautious buyer. She will try

to purchase products that will last her for a long time. She will try to get "millage"

out of every rupee she spends. She is less likely to purchase use and throw type of

products. Besides being quality conscious, he also is cost conscious. Before buying a


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particular product she will first check the price with other sellers and will then go in

for the lowest price.

Because of being quality and cost conscious, extra features like re-usable containers

will influence her buying decision. Bonus prizes, coupons, rebates etc. will

definitely attract her attention.

Instead of advertising she relies on word-of-mouth communication. She is interested

in knowing what her neighbor or colleges are using. Even after she purchases a

product she seeks reassurance about making the right purchase decision.

Lei su re seek ing :

As time passes the house wife is getting used to more and more leisure though the

use of modern gadgets like washing machines and other such house hold items. She

will be interested in new innovations that reduce her work time even more. She may

not be able to afford all the modern gadgets that are available in the market but they

still hold her interest because they are a potential for saving time and avoiding

drudgery.


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How & Why to identify your target market?

W h a t i s t h e t a rg e t m a r k e t ?

As discussed earlier, the country's consumers can be divided into so many different

consumer groups. Based on which consumer groups they lie in, the consumers will

have different needs. Also they will find different things that appeal to them. So

before you launch a marketing campaign, you need to identify which set of people

does your business cater to?

What we mean by this is that you need to know who your customers are? What kind

of life do they live? Who influences their buying decision? What kinds of media are

they exposed to? How much purchasing power do they have? Etc. etc.

Knowing this information, you can target your marketing campaign to appeal

especially to this group of customers you have chosen.

Many a times, you may find that the product or service you are offering is consumed

by not only one group of people. You may find that your product has many varied

uses and hence has many varied possible consumers. Because of this you may want

to choose more than one group of people as your target market. DO NOT DO THIS!

I repeat DO NOT DO THIS!

Your marketing strategy will fail if you try to be everything to everybody. When

you make a marketing strategy you have to choose only one group of people and

design your marketing strategy so that it appeals to the group you have selected.


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If you have many groups of people to choose from, choose only the group of people

that you can best cater too and will offer you the best opportunities to grow. For

example, if you are a small firm that makes womens perfumes, your target market

could be teenage girls, house wifes, rich women who can afford to spend highly on

perfumes and other such accessories etc. You could choose any one of these

customer groups as your target market. Suppose you choose the rich women group

then your marketing plan will be designed to appeal to rich women. The price of

your perfume will be high. Your ads will be designed to appeal to rich women etc.

These ads cannot simultaneously appeal to younger middle class women also.

If you come up with a marketing strategy to appeal to more than one target group of

customers, your strategy will not be effective. Your sales will be eaten away by

specialist products or specialist marketing strategies.

Just consider the case of shampoo. If some one is looking for a shampoo to deal with

their dandruff problem, they are more likely to buy a shampoo which says "Anti-

dandruff shampoo" than a shampoo that says, "Hair shine, Hair strength and Anti-

Dandruff" shampoo. This point will be explained later again in more detail.

The thing to understand is that the first step to making a marketing strategy is to

select the target market for whom the marketing campaign is to be designed.


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How to iden t i fy who your t a rge t marke t i s ?

Most of the people who are reading this already have a running business. Now they

probably would like to market their business so that they can expand and grow. For

you people (who already have a running business), it is very easy to identify who

your target market is. What you have to do is run a little research about all your

existing customers. If you are a retailing unit, you could find out who are the people

who purchase form you.

Once you have a general idea about the people who purchase from you, you need to

classify them into different groups. Finally you will have a general idea about the

different kinds of customers that buy from you. Finally, you have to choose one of

these groups as your target market. You may choose the biggest group or you may

choose the group with the greatest buying power etc. and decide on it to be your

target group.

Like in the above example, assuming you are a small business who makes

shampoos. You may classify your customers as people who buy your shampoo to

strengthen their hair and prevent hair from falling or buy your shampoo to reduce

their dandruff or people who buy your shampoo because it is made up of natural oils

which appeals to them etc.

You should identify how large these different groups are and which group you are

comfortable with. Which group of people your shampoo will really be able to

satisfy. Once you choose that group you have your target market. Then the next step


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How to design and mange your product?

When talking about the product in marketing you do not only mean the core product. You mean the product and all the things associated with it. These are:

The core or basic constituent

Associated features

The brand name

The package

The label

To understand how all the above stated things affect the product, consider the

case of toilet soap. Toilet soap by itself is not a very glamorous product.

However, companies rarely actually advertise the soap. They advertise the

smell, the colorful packing, the oval shape, the feeling of freshness etc.

associated with the soap.

Using all these features they make the soap very suited to appeal to their target

audience. Using all these features they make their product stand out with

respect to the rest of the products in the same category.

Using all these frills and making changes in the core product is called product

management. Product management is done mainly for "positioning" the product

or making the product stand out in the target customers mind. This brings us to

a very important concept in the modern marketing environment called

"positioning".


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How to position your product in your consumers mind?

W h a t i s " p o s i t i o n i n g " ?

Positioning is the fight for the consumers mind. The different marketers want to

secure a place in the mind of the target consumer. To do this the marketers use

"positioning". What this means is that the marketers want their product to come to

mind when the consumer thinks about purchasing that product type.

For example: The marketers of "Liril" soap want the people to think "Liril" when

they think soap. The marketers of "Colgate" want the consumers to think "Colgate"

when they think toothpaste etc.

In India, "Xerox" is what comes to mind when people think of "photo-copying".

"Colgate" comes to the mind of people when they think toothpaste. However, now

with intensive competition things are changing.

Positioning a product in the minds of the consumer is becoming harder. However,

positioning is going to play a very important role in marketing in an overly

competitive environment.

If you have a particular product or service, then you want people to think of you

when they think of buying the kind of product or service you sell. In India there are

few stores that hold a strong positioning in the mind of the consumers. In other

countries, there are special stores where you can go only to go to do your laundry.

There are special stores where you can go only to "Xerox". There are special stores


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that are dedicated only for the buying of candles, perfumes etc. These stores have a

strong positioning in the minds of the consumers. When the consumer thinks candles

he goes to the candles store. When the consumer thinks "Xerox" he goes to the

copying stores.

In India we have a lot of general stores. The "Banya" shop has everything in it.

There are few specialized stores. There are specialized "Hardware shops" or in the

whole sale market there are whole shops dedicated to the selling of one item like

"ropes" etc. However these stores are not everywhere and their positioning in the

mind of the consumer is not very strong.

Besides this, there are many specialized stores that are given vague names that make

it hard for them to be positioned strongly in the mind of the consumer. For example:

a hardware store might be given a name "Murarilal And Sons". This makes it

unclear to the consumer what the store sells unless he is given the reference of the

store or visits the store himself. This might have been okay when the competition

was not very large. However, as the competition increases, if a store aims to get new

customers, it has to change its name to a name that represents what the store is

about. If this is not done, all the new business will go to stores that are well

positioned in the minds of the consumers.

If you are a business selling a product in an already saturated segment of the market

like tooth-paste or face creams etc. you have to position your product in the minds of

your consumers cleverly.

For example, in the case of fairness creams the first thing that comes to the

consumers mind is generally Fair and Lovely. Fair and lovely is very well


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positioned in the minds of the consumers. Lunching a product to change this

position of Fair and Lovely in the minds of the consumers may be hard. However,

if you position your fairness cream in the minds of the consumers on the basis of

some unique selling point then maybe you might have a place in the mind of the

consumer. For example: If your ads say that yours is a fairness cream specially

designed for oily skin then you have a position in the minds of the consumer. If a

consumer with oily skin thinks about a fairness cream, they will think about your

cream.

Consider the case of Dominoes Pizza. They have positioned them selves in the

minds of the consumers as fast home delivery of pizza under 30 minutes. Because

of this Pizza Hut has become the place to go and eat pizza but Dominoes is what

you think of when you think home delivery of pizza. This is what positing is all

about. Finding a place in the customers head.

Positioning has to be specific. The more specific, the better will the positioning be.

For example, consider three stores:

A huge shopping complex that also has a foot ware department

A store specially dedicated to foot ware

A store specially dedicated to womens foot ware.

If a woman was to think about buying new shoes and she knew about these above

stated options, then she would most likely go to the third store. That is the store that

will come to her mind when she thinks about buying shoes.


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People are more likely to trust specialists than generalists. If you are to have an open

heart surgery, who would you trust, a general surgeon or a specialist heart surgeon?

This is what positioning is all about. Its about finding a place in the minds of the

consumers. Making the consumers think of you when they want something you are

selling. The best way to achieve this is to clearly differentiate yourself from you

competition in what you are offering and clearly tell the consumer exactly what you

are offering.

INOVATION OF MARKET

Top Ten Trends in Marketing Innovation

By: Stefan Kolle

Ive put together the 10 key trends I see for 2007 in Marketing Innovation. None of these are

new, except for Net Promoter Scores which have only been around for a few years.

And, OK, I have to admit that some of these might end up being more wishful thinking thenactual trends, but I get the disctinctive feeling many marketers are actually starting to wake up.

Authenticity

Authenticity, honesty, realness should have been at the top of this list for the past 10 years but it seems as if it is actually breaking through now. Too many great examples of howcompanies enhanced their image and standing with either the general public or a relevant groupof advocates have emanated recently Scobleizer has probably generated billions worth of goodwill for Microsoft, Direct2Dell executives fessing up to making mistakes has taken the air out of the whole DellHell movement, and many a politician has recently saved himself bycoming out straight away with the oh man, Im just human, please forgive me or yup, Im gay,so what approach.


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Also the negative examples still abound, and this time around they are starting to hurt. We wontmention names *coughEdel man cough* *coughwalmartcough*

Net Promoter Scores

Sell your shares in market research agencies their extensive research methods will go the wayof the dinosaurs. Turns out, it all comes down to one question: "On a scale of 0 to 10, how likelyare you to recommend brand/product X to someone else?" As the results of this research can bedirectly tied to revenue growth, instead of intangible (and not-boardroom safe) fuzzies like brandrecognition, watch the corporate world being taken by storm by NPS, following the likes of GEand Philips.

And isnt it great that the interruption during dinner time will only last 10 seconds instead of 10minutes?

Buzztracking

Whats being said about me? Why is nobody talking about me? These are becoming core issuesfor every company. With the advent of ever better tracking tools for online conversations, its

becoming indispensable to listen into those conversations, be it to monitor bad things happeningout there so you can jump in and call corporate 911, or to find out that nobody really cares aboutyou (which is actually even worse).

Time to go look at those Net Promoter Scores...

From segmentation to insights

Hey Cathy, I know you have a long distance relationship and are working only part-time to carefor your newborn baby (which by the way has done it for your disposable income, for good), butI will still treat you the same as two years ago, when you were a job-starting, free-spending partyanimal. After all, you are still a 25-29 year old highly educated urban single female, arent

you? Nuff said.


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Green

It may be a cynical choice by many companies, but green awareness is the trend-du-jour. If evenWalMart is starting to promote eco-friendliness, where will it stop? As there is a lot of revenuewaiting in this market be it from selling eco-friendly goods at marked-up margins, or actually

providing eco-technology, this one won't go away.

Personally I dont care if they move into this market for cynical reasons, its the end result thatcounts.

Grey

Marketers the world over are waking up to the fact that the older demographic is a major opportunity and needs to be addressed in a different way then the 18-34 year olds. Mind you,different doesnt mean being patronizing and playing on old age. Were talking people who went

to Woodstock and did all kinds of naughty things in their youth dont talk to them as if they aresenile.

Maybe the fact that many advertising and marketing executives are Boomers themselves willhelp here.

Co-creation

The lazy developers dream let your customers come up with your products for you. The power of harnessing your customers insights is amazing. Once again you are connecting directly to theinsights, wishes and beliefs of your customers, ensuring that you will hit a home-run with the restof the world too.

And the funny thing is they will do it for free, and even shout it out at the world for you, hey, Ihelped develop the next Lego Robots, and man, they are cool.


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Experimentation budgets

Following the leaders like Unilever, P&G and Heineken, marketers realize that they will have to

set a portion of their marketing budgets aside for well structured experiments. Developments inthe digital domain are so fast and furious its not always possible to wait for full understanding.By experimenting in a controlled way companies can get insights at very attractive cost andsometimes even strike gold.

You may not get 24 million viewing minutes for your Ronaldinho fake video on Youtube, but10.000 views with your target of influencers might be worth just as much, especially if it onlycosts you 5.000 to do something for them.

The Return of the Soap

As the consumers aversion to traditional 30 spots is starting to hurt, TV channels andadvertisers alike have to look for different models. Product placement and branded entertainmentare starting to take up a serious position in their portfolios. A major advantage is that theconvergence of TV and online is almost built into this model, as there are far less objections tothe re-distribution of branded content throughout the internet then with traditional advertising-funded models.

Whether through podcasts, on-demand TV, the fact that the good guys always use Macs or by putting your music up on MySpace, you can be a star outside the networks, or together withthem.

More CGA

Not only developers have their lazy-dream, marketers too: Consumer Generated Advertising. Let

your customers not only be your Promoters, but actually make your advertising for you. As thisadvertising will always be based on what they REALLY love about you, its sure to strike homewith other consumers.

Giving your advocates the tools to tell your story for you is one of the most effective and cost-efficient ways to enhance your position in the market. Its also scary as hell, but dont worry


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the simple fact that you show the guts to even let your detractors pipe up like Chevy Tahoe did,will create a lot of goodwill.

Oh, and dont be silly like FedEx or Apple and try to sue your evangelists.

Licensing Your Dissertation under Creative Commons

By: danah boyd

When I wrote my dissertation, it didn't dawn on me that using the Creative Commons licensemight be remotely controversial. There's a template for dissertations at Berkeley and one of those pages is the copyright page. Initially, I edited the copyright page to match the CC license thatCory Doctorow uses in all of his books on the copyright page. Shortly before I was set to file, Italked to another grad student in my department who had just filed his dissertation. Much to myhorror, I learned that he was the first student to file his dissertation at Berkeley under theCreative Commons license and that it had been a disaster .

Smiley Power: Green Marketing That WorksBy: Roger Dooley

Could a simple smiley face on your power bill change your consumption? Utilities in variousstates, tired of unsuccessful attempts to encourage energy-saving strategies by their customers,are resorting to an approach based on sound neuromarketing principals: social pressure. As Inoted in my post, Green Marketing Doesnt Work , traditional appeals to Save the Planet arenteffective, while pitches showing that other people are behaving as desired DO perform better.

One simple approach employed by a California utility is to use smiley (but not frowny!) faces tohighlight how an individual household compares in its energy usage with its neighbors.

Last April, [the Sacramento Municipal Utility District] began sending out statements to 35,000randomly selected customers, rating them on their energy use compared with that of neighbors in100 homes of similar size that used the same heating fuel. The customers were also comparedwith the 20 neighbors who were especially efficient in saving energy.


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Customers who scored high earned two smiley faces on their statements. Good conservationgot a single smiley face. Customers like Mr. Dyer, whose energy use put him in the belowaverage category, got frowns, but the utility stopped using them after a few customers got upset.[From the New York Times - Utilities Turn Their Customers Green, With Envy by LeslieKaufman.]

The utility found that consumers who got the personalized energy report cut usage by 2% morethan those who didnt. That doesnt sound huge, but even small percentages can have a bigimpact on utilities.

The reports are generated by Positive Energy , a firm in which persuasion expert Robert Cialdinihas a stake. Cialdini notes, It is fundamental and primitive. The mere perception of the normal

behavior of those around us is very powerful.

In some cases, the effort goes beyond mild social pressure and becomes outright competition.

At Central College in Pella, Iowa, students in a new green dorm can go to the schools Web siteto find out how much power their suite is using and compare it with that of other suites.

It gets pretty intense, said Michael Lubber den, director of facilities planning and managementfor the college. The students even go off campus to charge their cell phones.

A Massachusetts non-profit, the Brain Shift Foundation , is actually organizing a reality TVseries, Energy Smack down, in which homeowners compete to save energy. Savings as high as66% were generated in the competition.


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Joy of Innovation

Prof Athish Chattaopadhyay on Marketing Plan

September 3, 2008 1 Comment

Human beings are not rational. Perception is everything. Marketers thrive on the heteroginity of the humans.If you ask the question What is one plus one? An artsy person will answer Onetwo buckle my shoe three four shut the door you ask the same question is asked to anaccountant, he will say What do you want it to be? and Ask a scientist he say It is alwaysequals 2! and a Marketer will say It must always be more than 2 It could be 11 or it could be100, but always more than 2. That is perception, rather creating the perception.

Athish encouraged us to change the product centric view to customer centric view. Then he madea case for systematic approach to marketing. And walked us through the set of questions to ask ourself to come up with a plan.

Im going to do the exercise.

Marketing and Innovation

Peter Drucker defines marketing as the unique function that distinguishes a business from other organizations. It produces the revenue that is the lifeblood of the business. It is so basic that itcan not be considered on a par with other business functions such as manufacturing or personnel,

but is a central dimension of the entire organization. Therefore, responsibility for marketingmust permeate all areas of the enterprise.

The purpose of a business is to create customers it can serve profitably. A business fulfills this purpose by providing a product or service that satisfies a customer need. The satisfaction of thisneed provides value to customers for which they are willing to pay. The customers perceivedimportance of this need determines how highly they value the product or service and what theyare willing to pay for it.

Effective marketing is viewing the company from the outside, from the customers perspective.Customers buy solutions to problems and businesses sell products or services that provide thesesolutions. The essence of marketing is linking customers' problems to business products andservices.


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A business enterprise requires an expanding economy. It needs growth if it is to attract talent,create job advancement opportunities, and provide new customer satisfactions. Therefore,innovation- the provision of different economic satisfactions, is the second fundamental functionof a business.

Drucker defines innovation as the task of endowing human and material resources with new andgreater wealth producing capacity. It is not confined to separate business functions but extendsacross all activities of the enterprise. It provides the means to convert society's needs to

profitable business opportunities.

Only marketing and innovation produce revenue. All other business functions produce costs

A personification of innovation as represented by a statue in The American Adventure in theWorld Showcase pavilion of Walt Disney World's Epcot.

The term innovation means a new way of doing something. It may refer to incremental, radical,and revolutionary changes in thinking, products, processes, or organizations. A distinction istypically made between Invention, an idea made manifest, and innovation, ideas appliedsuccessfully. (Mckeown 2008) In many fields, something new must be substantially different to

be innovative, not an insignificant change, e.g., in the arts, economics, business and government policy. In economics the change must increase value, customer value, or producer value. Thegoal of innovation is positive change, to make someone or something better. Innovation leadingto increased productivity is the fundamental source of increasing wealth in an economy.

Innovation is an important topic in the study of economics, business, technology, sociology, andengineering. Colloquially, the word "innovation" is often synonymous with the output of the

process. However, economists tend to focus on the process itself, from the origination of an ideato its transformation into something useful, to its implementation; and on the system withinwhich the process of innovation unfolds. Since innovation is also considered a major driver of the economy, especially when it leads to increasing productivity, the factors that lead toinnovation are also considered to be critical to policy makers.

Those who are directly responsible for application of the innovation are often called pioneers intheir field, whether they are individuals or organisations.


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Conceptualizing innovation

Innovation has been studied in a variety of contexts, including in relation to technology,

commerce, social systems, economic development, and policy construction. There are, therefore,naturally a wide range of approaches to conceptualizing innovation in the scholarly literature.See, e.g., Fagerberg et al. (2004).

Fortunately, however, a consistent theme may be identified: innovation is typically understood asthe successful introduction of something new and useful, for example introducing new methods,techniques, or practices or new or altered products and services.

Innovation as a behavior

Some in depth work on innovation in organisations, teams and individuals has been carried out by J. L. Byrd[, PhD who is co-author of "The Innovation Equation." Dr Jacqueline Byrd is the brain behind the Creatrix Inventory which can be used to look at innovation and what is behindit. The Innovation Equation she developed is:

Innovation = Creativity * Risk Taking

Using this inventory it is possible to plot on axis where individuals fit on their Risk Taking andCreativity.

Innovation and market outcome

Market outcome from innovation can be studied from different lenses. The industrialorganizational approach of market characterization according to the degree of competitive

pressure and the consequent modelling of firm behavior often using sophisticated game theoretictools, while permitting mathematical modelling, has shifted the ground away from an intuitiveunderstanding of markets. The earlier visual framework in economics, of market demand andsupply along price and quantity dimensions, has given way to powerful mathematical modelswhich though intellectually satisfying has led policy makers and managers groping for moreintuitive and less theoretical analyses to which they can relate to at a practical level. Nonquantifiable variables find little place in these models, and when they do, mathematicalgymnastics (such as the use of different demand elasticities for differentiated products) embracemany of these qualitative variables, but in an intuitively unsatisfactory way.

In the management (strategy) literature on the other hand, there is a vast array of relativelysimple and intuitive models for both managers and consultants to choose from. Most of these


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models provide insights to the manager which help in crafting a strategic plan consistent with thedesired aims. Indeed most strategy models are generally simple, wherein lie their virtue. In the

process however, these models often fail to offer insights into situations beyond that for whichthey are designed, often due to the adoption of frameworks seldom analytical, seldom rigorous.The situational analyses of these models often tend to be descriptive and seldom robust andrarely present behavioral relationship between variables under study.

From an academic point of view, there is often a divorce between industrial organisation theoryand strategic management models. While many economists view management models as beingtoo simplistic, strategic management consultants perceive academic economists as being tootheoretical, and the analytical tools that they devise as too complex for managers to understand.

Innovation literature while rich in typologies and descriptions of innovation dynamics is mostlytechnology focused. Most research on innovation has been devoted to the process (technological)of innovation, or has otherwise taken a how to (innovate) approach. For example the integrated

innovation model of Soumodip Sarkar . These 'integrated' approaches, draw on industrialorganization, management and innovation literature.

Sources of innovation

There are several sources of innovation. In the linear model of innovation the traditionallyrecognized source is manufacturer innovation . This is where an agent (person or business)innovates in order to sell the innovation. Another source of innovation, only now becomingwidely recognized, is end-user innovation . This is where an agent (person or company) developsan innovation for their own (personal or in-house) use because existing products do not meettheir needs. Eric von Hippel has identified end-user innovation as, by far, the most important andcritical in his classic book on the subject, Sources of Innovation .

Innovation by businesses is achieved in many ways, with much attention now given to formalresearch and development for "breakthrough innovations." But innovations may be developed byless formal on-the-job modifications of practice, through exchange and combination of

professional experience and by many other routes. The more radical and revolutionaryinnovations tend to emerge from R&D, while more incremental innovations may emerge from

practice but there are many exceptions to each of these trends.

Regarding user innovation, a great of innovation is done by those actually implementing andusing technologies and products as part of their normal activities. Sometimes user-innovatorsmay become entrepreneurs, selling their product, they may choose to trade their innovation inexchange for other innovations, or they may be adopted by their suppliers. Nowadays, they mayalso choose to freely reveal their innovations, using methods like open source. In such networks


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of innovation the creativity of the users or communities of users can further develop technologiesand their use.

Whether innovation is mainly supply-pushed (based on new technological possibilities) or demand-led (based on social needs and market requirements) has been a hotly debated topic.

Similarly, what exactly drives innovation in organizations and economies remains an openquestion.

More recent theoretical work moves beyond this simple dualistic problem, and through empiricalwork shows that innovation does not just happen within the industrial supply-side, or as a resultof the articulation of user demand, but through a complex set of processes that links manydifferent players together not only developers and users, but a wide variety of intermediaryorganisations such as consultancies, standards bodies etc. Work on social networks suggests thatmuch of the most successful innovation occurs at the boundaries of organisations and industrieswhere the problems and needs of users, and the potential of technologies can be linked together

in a creative process that challenges both.

Value of experimentation in innovation

When an innovative idea requires a new business model, or radically redesigns the delivery of value to focus on the customer, a real world experimentation approach increases the chances of market success. New business models and customer experiences cant be tested throughtraditional market research methods. Pilot programs for new innovations set the path in stone tooearly thus increasing the costs of failure.

Stefan Thomke of Harvard Business School has written a definitive book on the importance of experimentation. Experimentation Matters argues that every companys ability to innovatedepends on a series of experiments [successful or not], that help create new products and servicesor improve old ones. That period between the earliest point in the design cycle and the finalrelease should be filled with experimentation, failure, analysis, and yet another round of experimentation. Lather, rinse, repeat, Thomke says. Unfortunately, uncertainty often causesthe most able innovators to bypass the experimental stage.

In his book, Thomke outlines six principles companies can follow to unlock their innovative

potential.

Anticipate and Exploit Early Information Through Front-Loaded Innovation Processes

Experiment Frequently but Do Not Overload Your Organization.

Integrate New and Traditional Technologies to Unlock Performance.

Organize for Rapid Experimentation.


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Fail Early and Often but Avoid Mistakes.

Manage Projects as Experiments.

Thomke further explores what would happen if the principles outlined above were used beyond

the confines of the individual organization. For instance, in the state of Rhode Island, innovatorsare collaboratively leveraging the state's compact geography, economic and demographicdiversity and close-knit networks to quickly and cost-effectively test new business modelsthrough a real-world experimentation lab.

Diffusion of innovations

Once innovation occurs, innovations may be spread from the innovator to other individuals andgroups. This process has been proposed that the life cycle of innovations can be described using

the s-curve or diffusion curve. The s-curve maps growth of revenue or productivity againsttime. In the early stage of a particular innovation, growth is relatively slow as the new productestablishes itself. At some point customers begin to demand and the product growth increasesmore rapidly. New incremental innovations or changes to the product allow growth to continue.Towards the end of its life cycle growth slows and may even begin to decline. In the later stages,no amount of new investment in that product will yield a normal rate of return.

The s-curve is derived from half of a normal distribution curve. There is an assumption that new products are likely to have "product Life". i.e. a start-up phase, a rapid increase in revenue andeventual decline. In fact the great majority of innovations never get off the bottom of the curve,

and never produce normal returns.

Innovative companies will typically be working on new innovations that will eventually replaceolder ones. Successive s-curves will come along to replace older ones and continue to drivegrowth upwards. In the figure above the first curve shows a current technology. The secondshows an emerging technology that current yields lower growth but will eventually overtakecurrent technology and lead to even greater levels of growth. The length of life will depend onmany factors.

Goals of innovation

Programs of organizational innovation are typically tightly linked to organizational goals andobjectives, to the business plan, and to market competitive positioning.

For example, one driver for innovation programs in corporations is to achieve growth objectives.As Davila et al. (2006) note,


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"Companies cannot grow through cost reduction and reengineering alone . . . Innovation is thekey element in providing aggressive top-line growth, and for increasing bottom-line results"

In general, business organizations spend a significant amount of their turnover on innovation i.e.making changes to their established products, processes and services. The amount of investment

can vary from as low as a half a percent of turnover for organizations with a low rate of changeto anything over twenty percent of turnover for organizations with a high rate of change.

The average investment across all types of organizations is four percent. For an organizationwith a turnover of say one billion currency units, this represents an investment of forty millionunits. This budget will typically be spread across various functions including marketing, productdesign, information systems, manufacturing systems and quality assurance.

The investment may vary by industry and by market positioning.

One survey across a large number of manufacturing and services organisations found, ranked indecreasing order of popularity, that systematic programs of organizational innovation are mostfrequently driven by:

Improved quality

Creation of new markets

Extension of the product range

Reduced labour costs

Improved production processesReduced materials

Reduced environmental damage

Replacement of products/services

Reduced energy consumption

Conformance to regulations

These goals vary between improvements to products, processes and services and dispel a popular myth that innovation deals mainly with new product development. Most of the goals could applyto any organisation be it a manufacturing facility, marketing firm, hospital or local government.


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Failure of innovation

Research findings vary, ranging from fifty to ninety percent of innovation projects judged tohave made little or no contribution to organizational goals. One survey regarding productinnovation quotes that out of three thousand ideas for new products, only one becomes a success

in the marketplace. [citation needed ] Failure is an inevitable part of the innovation process, and mostsuccessful organisations factor in an appropriate level of risk. Perhaps it is because allorganisations experience failure that many choose not to monitor the level of failure very closely.The impact of failure goes beyond the simple loss of investment. Failure can also lead to loss of morale among employees, an increase in cynicism and even higher resistance to change in thefuture.

Innovations that fail are often potentially good ideas but have been rejected or shelved due to budgetary constraints, lack of skills or poor fit with current goals. Failures should be identifiedand screened out as early in the process as possible. Early screening avoids unsuitable ideas

devouring scarce resources that are needed to progress more beneficial ones. Organizations canlearn how to avoid failure when it is openly discussed and debated. The lessons learned fromfailure often reside longer in the organisational consciousness than lessons learned from success.While learning is important, high failure rates throughout the innovation process are wasteful anda threat to the organisation's future.

The causes of failure have been widely researched and can vary considerably. Some causes will be external to the organisation and outside its influence of control. Others will be internal andultimately within the control of the organisation. Internal causes of failure can be divided intocauses associated with the cultural infrastructure and causes associated with the innovation

process itself. Failure in the cultural infrastructure varies between organizations but thefollowing are common across all organisations at some stage in their life cycle (O'Sullivan,2002):

Poor Leadership

Poor Organization

Poor Communication

Poor Empowerment

Poor Knowledge Management

Common causes of failure within the innovation process in most organisations can be distilledinto five types:

Poor goal definition


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Poor alignment of actions to goals

Poor participation in teams

Poor monitoring of results

Poor communication and access to information

Effective goal definition requires that organisations state explicitly what their goals are in termsunderstandable to everyone involved in the innovation process. This often involves stating goalsin a number of ways. Effective alignment of actions to goals should link explicit actions such asideas and projects to specific goals. It also implies effective management of action portfolios.Participation in teams refers to the behaviour of individuals in and of teams, and each individualshould have an explicitly allocated responsibility regarding their role in goals and actions and the

payment and rewards systems that link them to goal attainment. Finally, effective monitoring of results requires the monitoring of all goals, actions and teams involved in the innovation process.

Innovation can fail if seen as an organisational process whose success stems from a mechanisticapproach i.e. 'pull lever obtain result'. While 'driving' change has an emphasis on control,enforcement and structure it is only a partial truth in achieving innovation. Organisationalgatekeepers frame the organisational environment that "Enables" innovation; however innovationis "Enacted" recognised, developed, applied and adopted through individuals.

Individuals are the 'atom' of the organisation close to the minutiae of daily activities. Withinindividuals gritty appreciation of the small detail combines with a sense of desired organisationalobjectives to deliver (and innovate for) a product/service offer.

From this perspective innovation succeeds from strategic structures that engage the individual tothe organisation's benefit. Innovation pivots on intrinsically motivated individuals, within asupportive culture, informed by a broad sense of the future.

Innovation, implies change, and can be counter to an organisation's orthodoxy. Space for fair hearing of innovative ideas is required to balance the potential autoimmune exclusion that quellsan infant innovative culture.

Measures of innovation

There are two fundamentally different types of measures for innovation: the organisational leveland the political level. The measure of innovation at the organisational level relates toindividuals, team-level assessments, private companies from the smallest to the largest. Measureof innovation for organisations can be conducted by surveys, workshops, consultants or internal


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benchmarking. There is today no established general way to measure organisational innovation.Corporate measurements are generally structured around balanced scorecards which cover several aspects of innovation such as business measures related to finances, innovation processefficiency, employees' contribution and motivation, as well benefits for customers. Measuredvalues will vary widely between businesses, covering for example new product revenue,spending in R&D, time to market, customer and employee perception & satisfaction, number of

patents, additional sales resulting from past innovations. For the political level, measures of innovation are more focussing on a country or region competitive advantage through innovation.In this context, organizational capabilities can be evaluated through various evaluationframeworks e.g. efqm (European foundation for quality management). The OECD Oslo Manualfrom 1995 suggests standard guidelines on measuring technological product and processinnovation. Some people consider the Oslo Manual complementary to the Frascati Manual from1963. The new Oslo manual from 2005 takes a wider perspective to innovation, and includesmarketing and organizational innovation. Other ways of measuring innovation have traditionally

been expenditure, for example, investment in R&D (Research and Development) as percentageof GNP (Gross National Product). Whether this is a good measurement of Innovation has beenwidely discussed and the Oslo Manual has incorporated some of the critique against earlier methods of measuring. This being said, the traditional methods of measuring still inform many

policy decisions. The EU Lisbon Strategy has set as a goal that their average expenditure onR&D should be 3 % of GNP.

The Oslo Manual is focused on North America, Europe, and other rich economies. In 2001 for Latin America and the Caribbean countries it was created the Bogota Manual

Many scholars claim that there is a great bias towards the "science and technology mode" (S&T-mode or STI-mode), while the "learning by doing, using and interacting mode" (DUI-mode) iswidely ignored. For an example, that means you can have the better high tech or software, butthere are also crucial learning tasks important for innovation. But these measurements andresearch are rarely done.

Global Innovation Index

In January 2009, the 2008-2009 Global Innovation Index was published. It was created bySoumitra Dutta, a professor at French business school INSEAD, along with New Delhi basednon-profit organization The Confederation of Indian Industry. The ranking is based on indicessuch as the number of internet users in a nation, the ease of doing business and the stability of

banks (that score alone makes surprising that the U.S. tops the list). Every factor is thencategorized as either an input or an output, with inputs indicating how conducive countries are tostimulating innovation (these include institutions and policies, human capacity, infrastructure,


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technological sophistication, business markets and capital). The outputs indicate how effectivelycountries translate innovation into benefits - like knowledge, competitiveness and wealth. Thetop ten countries are listed below:

Value of experimentation in innovation

When an innovative idea requires a new business model, or radically redesigns the delivery of value to focus on the customer, a real world experimentation approach increases the chances of market success. New business models and customer experiences cant be tested throughtraditional market research methods. Pilot programs for new innovations set the path in stone tooearly thus increasing the costs of failure.Stefan Thomke of Harvard Business School has written a definitive book on the importance of experimentation. Experimentation Matters argues that every companys ability to innovatedepends on a series of experiments [successful or not], that help create new products and servicesor improve old ones. That period between the earliest point in the design cycle and the finalrelease should be filled with experimentation, failure, analysis, and yet another round of experimentation. Lather, rinse, repeat, Thomke says. Unfortunately, uncertainty often causesthe most able innovators to bypass the experimental stage.In his book, Thomke outlines six principles companies can follow to unlock their innovative

potential.

1. Anticipate and Exploit Early Information Through Front-Loaded Innovation Processes2. Experiment Frequently but Do Not Overload Your Organization.3. Integrate New and Traditional Technologies to Unlock Performance.4. Organize for Rapid Experimentation.5. Fail Early and Often but Avoid Mistakes.6. Manage Projects as Experiments.[6]Thomke further explores what would happen if the principles outlined above were used beyondthe confines of the individual organization. For instance, in the state of Rhode Island, innovatorsare collaboratively leveraging the state's compact geography, economic and demographicdiversity and close-knit networks to quickly and cost-effectively test new business models

through a real-world experimentation lab.


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INDEX

Chapter No. Contents Page No

1. What is marketing 3

2. Literacy scenario of India 6

3. Urban & rural life of India 9

4. Understanding Indian economics classes 115. How & why to identify your target market 14

6. How to design the best marketing mix for your business 17

7. How to design & manage your product 18

8. How to position your product in your consumer mind 19

9. Innovation of market plane 23

10. Licensing your dissertation under commons 25

11. Smiley power; green marketing that works 27

12. Joy of innovation 28

13. Value of experimentation in innovation 38

14. Questionnaire 39

15. Bibliography 40

Documents

Innovation of Marketing